Scenario C. (This is background information. See below for the specific questions)

On October 15, 2020, Big Hit Entertainment, the label management company behind the hugely popular K-pop band BTS, went public on the Korea Stock Exchange. Underwritten by JP Morgan and two South Korean investment banks, Big Hit issued about one fifth of its shares to the public and the offer was the largest IPO in South Korea in three years. It was more than 1000 times oversubscribed by institutional investors, and more than 600 times by retail investors.

The IPO price was set at (a USD equivalent price of) $118. On the first day of trading, the shares opened at $236 before eventually settling at $225. The financial media observed this event with fascination, offering commentaries such as The management company behind the popular South Korean boy band BTS has scored a huge hit on the countrys stock market after its shares doubled on their first day of trading. (theguardian.com)

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(4 marks) Refer to Scenario C above. Provide an answer to ONE of the following questions (a OR b only).

a/ Could Big Hit Entertainment's owners have saved on the costs of going public by opting to be acquired by a Special Purpose Acquisition Company (SPAC) instead? How?

OR

b/ In some circumstances, Big Hit Entertainment's owners might have achieved an even higher exit value than in the above IPO by opting for a trade sale to a listed entertainment company. Explain how this would in theory be possible. Also, explain the main disadvantage(s) of such a trade sale.