121 De-SPACs are a more structured version of the reverse merger whereby publicly listed shell companies are formed for the sole purpose of completing a business combination with a promising private company to bring it public. An Israeli company considering a US public listing should carefully consider each path and alternative to determine which is most well-matched to its goals and objectives. Evaluating the de-SPAC Path A de-SPAC transaction may be an attractive alternative to a traditional IPO for small- and mid-cap companies, those with limited public company peers, or issuers with a more complex investment thesis. De-SPACs allow companies to negotiate valuation in advance of public disclosure, potentially providing greater certainty and flexibility in deal economics—including the ability to structure earnouts tied to post-closing milestones. Lockup requirements in de-SPACs are also typically limited to insiders and affiliates, offering greater flexibility for other shareholders compared with the 180-day lockups customary in IPOs. However, de-SPACs present significant challenges. Both IPOs and de-SPACs carry market risk, but deSPAC closings are contingent on market receptivity to the deal and avoiding shareholder redemptions. Since 2021, redemption rates have increased substantially, leaving less capital available to fund the business combination. Target companies should anticipate the possibility of renegotiating deal terms postannouncement to address redemption concerns and ensure favorable post-closing trading. Additional considerations include the need to replace the SPAC’s public shareholder base through extensive marketing efforts, and the absence of underwriterfacilitated research analyst coverage that typically accompanies an IPO. Finally, if a de-SPAC transaction fails after public announcement, the disclosed valuation and company information remain in the public domain, potentially complicating future public offerings or strategic alternatives. Preparing To Go Public Israeli companies should begin preparations 18-24 months before a potential NYSE or Nasdaq listing. Key readiness areas include: » Financial Statements: At least two years of audited financial statements are required, prepared by a Public Company Accounting Oversight Board (PCAOB)-registered auditor that meets SEC and PCAOB independence requirements. Companies should address differences between private and public company accounting rules in advance. » Internal Controls: SOX 404 requires management to evaluate and report on internal controls over financial reporting. Material weaknesses must be disclosed in the registration statement. Many companies engage third parties to assess and remediate control issues prior to listing. » Capitalization and Shareholder Rights: Review the existing capital structure and shareholder rights to identify required consents, waivers, and amendments. Evaluate registration rights, approval or veto rights, and lockup obligations. » Board and Management: Assess board composition to ensure that it meets independence requirements and to enhance diversity and expertise. Evaluate whether additional accounting, finance, or investor relations staff—or senior management changes—are needed to meet public company demands. » Diligence Preparation: Underwriters, counsel, and (in a de-SPAC) the SPAC acquirer will conduct extensive legal and business diligence, including review of corporate records, material contracts, “With 2026 shaping up to be a breakout year for Israeli companies in the US capital markets, now is the time to prepare.” US — CAPITAL MARKETS
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