Which statement is false?

A. The goal of companies that become public through a direct listing is to raise additional capital.
B. When a company gets acquired by a SPAC, it goes public without paying for an IPO.
C. The target private company is unknown at the time of the SPAC IPO.

Correct Answer: A

A is false. The major difference between a direct listing and an IPO is that one sells existing stocks while the other issues new stock shares. In a direct listing, employees and investors sell their existing stocks to the public. In an IPO, a company sells part of the company by issuing new stocks.

B is true. All the fees and underwriting costs are covered before the target company ever gets involved.

C is also true. SPACs are also known as blank check companies because the target company is unknown at the time of the IPO.