The new reality of cross-border de-SPACs.

Most of the SPAC market's recent activity has been domestic. A Delaware vehicle combines with a United States target, the combined company lists on a United States exchange, and the governance package is drafted against a United States legal and regulatory baseline that every counterparty in the room understands. The mechanics are familiar enough that the structural questions get short shrift. The cross-border variant is a different product.

A cross-border de-SPAC, at its most common, pairs a United States listed vehicle with an operating business domiciled outside the United States, or pairs a vehicle organised outside the United States with a United States operating business that intends to list abroad. Neither pattern is new. What has changed is the cost of getting the details wrong, and the frequency with which sponsors and targets are encountering those details for the first time.

Why the cross-border frame is back

The renewed interest in cross-border transactions is not a fad. Several long-running conditions are pushing a specific kind of business toward the structure. Late-stage private companies in Europe, the Gulf, and selected Asian markets find that local public-market exits are narrower than they once were, while the United States public market remains the deepest pool of capital for a mid-cap growth franchise. Sponsors with genuine cross-border experience have rebuilt the networks that the 2021 cohort let lapse. And regulators on both sides of the Atlantic have made explicit that cross-border transactions remain acceptable when structured with discipline.

None of that means the structure is easy. It means the market for the structure is open to the subset of companies and sponsors willing to do the underlying work. That subset is smaller than the inbound interest suggests.

Jurisdictional risk lives in the governing documents

The first discipline is to understand that a cross-border de-SPAC carries more than one legal baseline. The vehicle's jurisdiction determines fiduciary duties, redemption mechanics, and the default rules for sponsor economics. The target's jurisdiction determines corporate law for the operating business, including minority protections, shareholder meeting requirements, and the procedural path for approving a business combination. The listing exchange's jurisdiction determines disclosure standards, governance rules, and the continuing obligations of the combined company.

Those three baselines must be reconciled in the governing documents before the transaction is announced, not after. A merger agreement that assumes Delaware defaults against a target domiciled in a jurisdiction with stronger minority rights will fail to close on time. A listing application that assumes one exchange's governance standards while the vehicle's charter reflects another will require amendments in the proxy process. Both outcomes are avoidable. Neither is rare in transactions where the cross-border element is treated as an afterthought.

Tax structuring is not a residual item

The second discipline is tax structuring. A domestic de-SPAC is a tax-inefficient structure executed with known variables. A cross-border de-SPAC introduces variables that can change the economics of the transaction for the target's existing shareholders, the sponsor, and the new public investors in ways that no one intends.

The common issues are familiar to any cross-border practitioner. Inversion concerns where the combined company's effective tax residence drifts in a direction the parties did not model. Withholding regimes that apply to dividends, interest, or share transfers between the combined company and its operating subsidiaries. Transfer-pricing arrangements that looked adequate when the target was private and look exposed under the disclosure standards of a listed company. Capital-gains treatment for rollover shareholders whose basis does not follow the target across the transaction.

None of those issues are insurmountable. All of them are expensive to address after announcement. A sponsor that treats tax as a due-diligence workstream rather than a structuring discipline is a sponsor that will negotiate a deal and then renegotiate it.

Governance asymmetry is the hardest problem

The third discipline, and the one most often underweighted, is governance. A combined company with United States public shareholders and an operating business domiciled abroad inherits a governance asymmetry that will persist for years. The board must function under United States exchange rules. The operating business must continue to function under local corporate-governance norms. The audit committee must interact with an auditor whose scope covers multiple jurisdictions. The compensation committee must approve executive packages that are legal, competitive, and tax-efficient in every relevant regime.

The asymmetry is manageable, but only if it is addressed in the board's composition and charter language before the first post-listing quarter. Independent directors need relevant cross-border experience, not just generic public-company credentials. The audit committee chair should have worked across both the target's and the vehicle's accounting frameworks. The compensation committee needs a consultant who understands both local pay norms and United States disclosure requirements. The nomination process should, from the beginning, contemplate succession candidates in both geographies.

Sponsors that have run several cross-border transactions have a standard practice for this. Sponsors that have not, often do not.

Counterparties who have done the work before

The fourth discipline is the counterparty set. A cross-border de-SPAC is not a transaction to learn on. Legal counsel on both sides of the border, auditors who have signed cross-border combined financials in the last three years, tax advisors with a working view of the relevant treaties, and PIPE investors whose allocation committees have approved cross-border structures before, are not interchangeable with the equivalent domestic roster. The most expensive cross-border transactions we have reviewed are those in which the sponsor assembled a domestic roster and expected it to scale across the border.

The tell is simple. In the first working session, ask each counterparty to list two recent cross-border de-SPAC transactions they worked on, including the specific structuring issues they resolved. Advisors who cannot name the transactions or the issues are advisors whose learning curve will be paid for by the target and its new public shareholders.

PIPE posture in a cross-border transaction

PIPE investors approach cross-border transactions with a posture that differs from their domestic stance. The discount to trust-adjusted book is typically wider to account for the incremental structural risk. Information covenants are tighter, including specific reporting lines on local regulatory developments and on the combined company's effective tax position. Lock-up terms are sometimes shorter, reflecting investor preference for the ability to rotate if the cross-border thesis does not materialise on the expected cadence.

A sponsor negotiating those terms on the target's behalf should know, with specificity, which of the typical PIPE concessions are structural and which are negotiable. The wrong concession on the wrong line can compound into a capital cost that the target did not need to pay. The right concession, made early, often produces a more confident book and a tighter aftermarket.

What makes a cross-border transaction worth doing

A cross-border de-SPAC is not the right structure for most companies. It is the right structure for a subset with a coherent answer to a specific question. That question is whether the company's operating reality and growth plan genuinely benefit from a United States public listing rather than a local one. Several answers are defensible. Access to the deepest pool of institutional capital for the company's sector. Customer presence concentrated in the United States market. An acquisitive growth strategy that requires a United States-listed currency. A management team whose reporting and governance discipline is closer to United States norms than to its home jurisdiction's baseline.

Those are the companies for which the incremental complexity of a cross-border structure pays for itself. Companies that cannot articulate one of those answers without hedging are companies for which a domestic listing in their home jurisdiction or a delayed United States listing is almost always the better path.

The governing principle

The market's appetite for cross-border de-SPACs is recovering because the underlying economic logic, for the right target, still holds. That recovery will persist only if the transactions that close in the next cohort are built with the structural discipline that the asset class now requires. The three disciplines that matter most are the same three that have always mattered. Jurisdictional alignment in the governing documents. Tax structuring treated as a first-order question, not a residual one. A governance package that reconciles the asymmetry between listing and operating jurisdictions before the first earnings call.

Governance before growth. Readiness before capital. Cross-border transactions reward both disciplines more, not less, than their domestic counterparts.

COMMENTARY · 04 OCT 2025 · 8 MIN READ · P.W.