In this edition, we spotlight the recent boom in special purpose acquisition company (SPAC) transactions and highlight emerging themes relative to stakeholder demands for Environmental, Social and Corporate Governance (ESG) reporting. This issue also includes considerations relative to the new convertible debt accounting standard (ASU 2020-06), observations from the December AICPA conference, TMT sector trends in M&A and capital markets, and SEC comment letter trends.
Debt market conditions continue to improve as tailwinds created by accommodative monetary and fiscal policy, as well as ongoing progress toward COVID-19 vaccinations, have provided companies an opportunity to bolster balance sheets, refinance outstanding debt, and raise capital for acquisitions and dividends at attractive levels. TMT credits in particular have outperformed as investors gravitated to defensive business models and more COVID-19-resilient sectors. This report digs deeper into the activity in bond markets and discusses what it means for the sectors’ IPOs.
Special purpose acquisition companies (SPAC) continue to attract media and investor attention in the second half of 2020. There were 82 SPAC IPOs in the third quarter, which was more than the total number in 2019 or any prior year. The number of SPAC mergers has also increased with private companies beginning to view SPACs as a viable path to liquidity and a public listing. Why are companies joining the SPAC boom? This report answers that question.
More than ever, companies are creating value among a broad group of stakeholders, including investors, employees, customers and suppliers, while managing their broader obligations to society. Stakeholder groups are calling on companies to do more on key sustainability topics and to be more transparent about their efforts. In many instances, traditional financial metrics tell only part of a company’s story. Our report examines how a company’s ability to demonstrate how environmental, social and other trends impact its strategy, operations and long-term prospects is important to meeting the needs of shareholders and other stakeholders.
On August 5, 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This report discusses key considerations related to the issuance of ASU No. 2020-06.
The 2020 AICPA National Conference on Current SEC and PCAOB Developments took place December 7-9, 2020. The conference featured representatives from regulatory and standard-setting bodies, along with auditors, preparers, securities counsel and industry experts. Our report summarizes topics covered and highlights relevant takeaways for TMT companies.
The SEC Division of Corporate Finance’s filing review process is a key function used by the SEC staff to monitor critical accounting and disclosure decisions applied by registrants. Our analysis of SEC comment letters identifies the frequency of topical areas addressed by the SEC staff and how their focus areas have changed over time. We provide insights on the nature of the SEC staff comments, sample text from the comments, and links to where you can learn more about the accounting and disclosure requirements addressed in each topical area.
The SEC recently introduced new disclosure requirements designed to provide stakeholders insight into human capital — from the operating model, to talent planning, learning and innovation, employee experience and work environment. The disclosures may help stakeholders evaluate whether a business has the right workforce to meet immediate and emerging business challenges and the nature and magnitude of the related investments. This report discusses the required disclosures.
This report includes a summary of the FASB's accounting standard updates and effective dates for private and public companies.