Tailwind Financial and Asset Alliance Corporation Announce Termination of Merger Agreement, Financial Services-Focused SPACs Face Trouble

On August 6, 2008, Tailwind Financial Inc, a $100 million SPAC priced in April 2007, provided notice to Asset Alliance Corporation of its decision to terminate their merger agreement first announced on January 8, 2008. Tailwind now has until the second week in April 2009 to announce and close on a transaction.

According to Tailwind:

"The decision to terminate was based on Tailwind’s belief that it would not be able to obtain the requisite stockholder approval for the transactions contemplated by the Agreement due to market conditions in the financial services sector."

Other financial services-focused SPACs still looking to announce their transactions, including Alternative Asset Management Acquisition Corp, BPW Acquisition Corp, Inter-Atlantic Financial, Inc, Prospect Acquisition Corp, and Triplecrown Acquisition Corp, should take a close look at the significant challenges to moving any future acquisitions over the goal line.

Bottom line for SPAC acquirors: Target quality firms, use significant leverage, and announce early. These factors should help mitigate investor challenges to approval.

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