Research On Faraday Future SPAC Merger And Acquisition Methods For Listing

China’s small and medium-sized enterprises have been facing the problem of difficult and expensive financing for a long time,and relevant departments have been actively exploring effective ways to solve this problem.The establishment of the Beijing Stock Exchange and the implementation of the comprehensive registration system can alleviate the financing problems of enterprises to some extent,and listing financing has always been an effective way to solve the financing problems of enterprises,However,regular IPO listing is not difficult for small and medium-sized enterprises and some enterprises with poor performance.The Chinese name of SPAC(Special Purpose Acquisition Companies)is "Special Purpose Merger and Acquisition Company".As the name implies,the meaning of SPAC’s existence is to complete a merger with a company.The special purpose of the merger is to help the acquired company complete its listing,and the process is similar to backdoor listing.In recent years,the development of SPAC mergers and acquisitions in overseas markets has been very rapid.In 2021,the number of successful IPOs of SPAC companies in the United States market once exceeded 50% of the total number of IPOs.In 2022,due to the impact of the global environment and the increasingly strict regulation of SPAC mergers and acquisitions in the United States market,the number of successful SPAC companies listed throughout the year has declined,and the number of final mergers and acquisitions has also decreased year-on-year.The Singapore Stock Exchange introduced this mechanism in2021,The Chinese Hong Kong Stock Exchange also officially introduced the mechanism of SPAC M&A and listing in January 2022,which seems to bring new vitality to the Hong Kong market.As a relatively novel listing method,SPAC mergers and acquisitions(M&As)have certain value for existence.Through case analysis of SPAC mergers and acquisitions(M&As),this paper summarizes the advantages and disadvantages of this mechanism,especially whether it is a listing channel that can be considered for small and medium-sized enterprises.In view of the absence of such a mechanism in China’s inland regions,whether the capital market in China’s inland regions can consider gradually introducing this mechanism in the future.This article,in the form of a case study,combs the development history of SPAC in detail,distinguishing it from general IPO and backdoor listing,and summarizes the development status of SPAC.By comparing the SPAC rules of the Hong Kong Stock Exchange with those of the US market,it is found that the rules of the Chinese Hong Kong Stock Exchange are stricter and provide more comprehensive protection for the interests of investors.Then,it analyzes the future of Faraday through its acquisition and listing with SPAC,comprehensively sorting out the entire development process of Faraday in the future,briefly introducing the SPAC company designed in the case,and sorting out the path of Faraday’s future acquisition and listing with SPAC company,analyzing the reasons why Faraday chose to conduct a reverse merger and listing with SPAC company in the future,regardless of subsequent stock price performance,Faraday has achieved its financing goals in the future.This paper summarizes and analyzes the future merger and listing process between Faraday and SPAC,and has achieved some good benefits in terms of resource support,listing time,listing cost,and certainty of listing for the sponsors.Similarly,there are certain risks in this process,such as the risk of merger failure that will cause the sponsors to bear significant losses,and Faraday may also encounter policy risks in the future Legal compliance issues,investors’ litigation risks,and the inevitable consequences of equity dilution and equity discounts.Although some risks have not brought substantial losses to Faraday in the future,they have to be addressed as potential risks.Finally,for the new energy vehicle company in which the case is located,this article gives some suggestions for listing through SPAC mergers and acquisitions.For companies that burn money and have insufficient income in the early stage,choosing this method for listing is a cost-effective financing option;For investors,they should also be aware of the inherent risks of this mechanism,such as principal-agent risks,and should make rational investment choices;For regulators,the view of this article is that it is prudent to introduce this mechanism in the mainland of China,track and observe the development of the subsequent SPAC mechanism in the Hong Kong market,and then consider further introducing the SPAC mechanism in the inland market.