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Michael Dell’s SPAC: Blank Check Company Pursues IPO

Michael Dell and executives from his family office have formed MSD Acquisition Corp., a Special Purpose Acquisition Company (SPAC) that's pursuing an IPO (initial public offering) valued at roughly $575 million, and hunting for potential merger and acquisition (M&A) targets.

Details about Michael Dell's SPAC -- also known as a blank-check company -- surfaced in an SEC filing.

Michael Dell will serve as a strategic adviser to the SPAC. The management team includes three executives from his family office -- John Cardoso, Gregg Lemkau and John Phelan. The trio manage some $19 billion for Dell’s family, SeekingAlpha notes.

The SPAC may seek M&A deals in any sector, though the management team has experience across technology and media. Also of note: The SPAC will not invest in Dell Technologies' principal markets.

SPAC Opportunities and Potential Bubble Concerns

A SPAC or “blank check” company is designed to raise funds in an initial public offering (IPO) with the aim of acquiring a private business. That private company then becomes public as result of the merger, Reuters notes. Or as Investopia puts it:

“The founder of a SPAC pools money from investors and he or she may contribute to the SPAC to form a blank check company with the sole purpose of acquiring another company—or companies. The money raised through the IPO of a SPAC is put into a trust. The funds are held until the SPAC successfully identifies a viable merger or acquisition opportunity to pursue with the invested funds.”

ChannelE2E believes SPAC organizations may acquire MSP software companies as soon as this year (2021).

Still, some pundits believe we’re heading toward a SPAC bubble — which involves too much money potentially flowing to lower-quality companies that perhaps shouldn’t be publicly held.

For more details, check out this List of Technology SPACs, which ChannelE2E updates regularly.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.