How do SPAC targets (acquired companies) benefit from additional cash upon merging with a SPAC?

Question

Hope this is the right place for the question.
There are many articles on SPACs explaining how things work, so I'll cut straight to the question: I have read and heard people say that a SPAC deal can be good for the target, ie the acquired company, because, amongst other things, the target benefits from a cash injection.
And this is what I don't understand: an acquisition by a SPAC allows the shareholders of the target company to cash-out: the money raised by a SPAC is used to purchase the shares of the target, thus it is the shareholders of a SPAC that benefit from the funds flow. So, unless mistaken, upon merger the SPAC has used all its cash for the purchase, so logically there would be no cash left in the structure.
So at what time does a SPAC aquisition represent a cash injection for the target? Does it happen systematically or only on certain deals?

Manziel · Answer

An IPO (and a SPAC acquisition is just a variant of this) can serve two purposes:

Raising capital for the company by creating new shares and selling them
Cashing out early investors by selling existing shares

To which extend each applies is specific to a concrete IPO.

Orange Coast- reinstate Monica · Answer

So at what time does a SPAC aquisition represent a cash injection for
the target? Does it happen systematically or only on certain deals?

It's common, not systematic, to have a funding event for the target company alongside a liquidity event for the target shareholders.
For example, the SPAC acquisition announcement for Joby Aviation puts great emphasis on the "gross proceeds" that will fund the target company rather than cashing out the target shareholders.

Dave Smith · Answer

A SPAC is basically a pot of money. This came from people who bought shares in the SPAC pre merger.
When the SPAC merges with a target the target gets that money in return for equity
The SPAC Shareholder have their SPAC shares converted into new shares in the resulting company, they aren't buying existing shares off shareholders in the target

How do SPAC targets (acquired companies) benefit from additional cash upon merging with a SPAC?

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