Consider a SPAC with the following terms:

■ 100 million units issued at $10 per share.

■ Promote equal to 20% of the SPAC ownership.

■ 25 million total warrants with an exercise price of $11.50 per share.

■ No PIPE investors.

a. What is the size of the promote (number of shares in millions)?

b. Suppose no shareholders redeem and all warrants are exercised, paying the strike price of

$11.50. How much cash will the SPAC ultimately contribute to the target?

c. What is the amount of cash per share contributed by the SPAC?

d. Suppose the SPAC offers to buy the target for 300 million shares. What is the implied valuation of the combined company at these terms?Appendix