June 11, 2007, 1:41 pm
You might think that shopping with other people’s money would be an easy mission in life. But for the dozens of “blank-check companies” — which raise cash through initial public offerings for the sole purpose of making acquisitions — sealing the deal can take a lot of effort.Monday’s proxy filing from Endeavor Acquisition, which agreed late last year to buy the trendy clothing chain American Apparel for $385 million, gives a glimpse of how, especially with so many well-funded private equity firms competing for deals these days, there can be plenty of failed talks on the way to a takeover deal.
Some prominent names in technology and finance have formed blank check companies, also known as special-purpose acquisition companies — or S.P.A.C.s — in the past year or so. These include Michael Gross, who co-founded the private equity firm Apollo Management with Leon Black, and Apple’s co-founder Steve Wozniak.
When they sell shares to the public, these kinds of companies usually pledge to liquidate if they don’t reach an agreement on a deal within a specified timeframe.
Endeavor’s chief executive is Jonathan Ledecky, who led a group that made an unsuccessful bid for the Washington Nationals baseball team a few years ago.
see also, M&A Prof. Blog.