SPAC deals almost never die suddenly. They die in the filings, one 8-K at a time, weeks before anyone drafts a termination notice.

Two weeks ago, a Nasdaq-listed SPAC and its bank-holding-company target mutually terminated their business combination the day before the shareholder vote. The transaction had a definitive agreement, an effective S-4, and a target with a genuine operating business. What it did not have was Federal Reserve approval — the bank's CEO told customers that the SEC had cleared the transaction but the Fed would not. The SPAC's shares jumped 43% after hours on the news, which tells you what the market thought the deal was worth relative to the cash in the trust.

I am not here to second-guess anyone involved. Bank charters carry regulatory approval requirements that operate on their own clock and their own criteria, and the parties walked away cleanly, with no termination fee on either side. But the episode is a useful case study, because the warning signs were sitting in the public record for months — and they are the same signs that show up, in one combination or another, in nearly every de-SPAC that fails to close.

This matters more right now than it has in years. The SPAC IPO machine priced 135 offerings for $24.3 billion in the first seven months of the year, according to Renaissance Capital, but the pace has cooled slightly — August is running at a rate of 11 IPOs against an average of 19 per month through July — and the 2025 cohort's completion deadlines are starting to bite. As I wrote in my Forbes column in June, the clock is about to matter. More deals racing the clock means more deals that will not make it. Here is what to watch for, whether you are a sponsor evaluating a target, a target CFO evaluating a SPAC, or an investor deciding whether to redeem.

The Six Warning Signs

1. Financing that is “intended” rather than committed. Read the deal announcement carefully. In the case above, the parties announced plans to arrange a PIPE or other proceeds of at least $50 million for closing — at signing, in January. By the vote date in August, no committed financing had been disclosed. “Intend to arrange” wording is not committed deal capital. When a definitive proxy goes out and the minimum-cash condition still depends on money that has not been raised, the deal is running on hope. Track the gap between announced financing intentions and disclosed commitments through every amendment.

2. Regulatory approvals treated as a formality. Banks need the Fed and state regulators. Insurers need state insurance commissioners. Broker-dealers need FINRA. Defense and cross-border deals may need CFIUS. Deals from China, Hong Kong, and Singapore are likely to require approval from the CSRC, depending on the citizenship of key shareholders and other factors. These approvals have their own timelines, their own standards, and — critically — their own veto. An S-4 can be declared effective and shareholders can vote yes, and none of it matters if the prudential regulator says no. If the target operates in a regulated industry, the approval condition deserves as much diligence as the financial statements. Ask who has actually engaged with the regulator, and when.

3. Target covenant compliance disclosed in the fine print. The proxy in this transaction disclosed that the target bank's Tier 1 leverage ratio was below the 4% threshold required by a merger covenant — while a regulatory consent order separately required 14%. That is not a footnote; that is the deal. Capital-ratio covenants, going-concern language, auditor changes, and late restatements all live in the S-4 and its amendments, in plain sight, for anyone willing to read past the projections.

4. Votes postponed past the redemption deadline. This deal's shareholder meeting was pushed from July 31 to August 14 — after the July 29 redemption deadline had already passed — with no reason given. A postponement after redemptions are locked is frequently a tell that the closing math does not work: the parties know how much cash is leaving trust, and they need time to fill the hole or negotiate around it. One postponement is housekeeping. A postponement with silence attached is a negative signal.

5. Heavy redemptions at extension votes. Extensions create redemption windows, and investors vote with their withdrawal slips. In the past two weeks alone, one SPAC saw $79 million leave trust at an extension vote and another saw $135 million depart. Every dollar redeemed shrinks the cash available at closing, increases dependence on the PIPE that may or may not exist (see sign #1), and can make meeting requirements for round-lot shareholders more challenging. Chart the trust balance across extensions: a SPAC that has extended twice and lost most of its trust is negotiating from a very different position than its original prospectus implied.

6. Serial extensions against a shrinking calendar. Each extension buys months, costs sponsor capital, and invites another redemption window. More importantly, deadline pressure degrades judgment. A sponsor staring at a liquidation date has every incentive to sign the deal that is available rather than the deal that has solid prospects as a new public company — the sponsor's promote is worth nothing in a liquidation. When you see a third extension filing, ask what changed about the target universe, because the honest answer is usually “our standards.”

What The Auditor Sees

Most of these signs converge on the audit file. The going-concern assessment turns on post-close cash runway, which turns on redemptions and the PIPE. The minimum-cash closing condition is tested against numbers the auditor must be able to support. Covenant compliance flows straight from the audited capital ratios. And the technical questions that drove the last restatement wave — warrant classification, earnouts, forward purchase agreements — are still the first things the SEC examines in a de-SPAC filing.

Which is why the deals that close cleanly tend to be the ones where the accounting workstream started early and the hard questions were asked before the definitive agreement, not after. I wrote in June about the twelve questions sponsors should put to an audit firm before engaging one. This is the companion discipline: the questions to keep asking after the letter of intent is signed, when the filings start doing the talking.

Reading The Tape

None of these signs is fatal on its own. Deals survive postponements, refill trusts with backstops, and secure regulatory approvals on the second try. And the same week this transaction unwound, the broader tape recorded another termination, a liquidation, and two fresh IPO pricings — the market is sorting winners from casualties in real time, which is what a functioning market does.

But the pattern is reliable: terminations are lagging indicators. The leading indicators are redemption tallies, financing gaps, covenant disclosures, and calendar math, all of it public, all of it filed months before the end. The investors and counterparties who get surprised by a dead de-SPAC are, almost without exception, the ones who stopped reading after the deal announcement.

At MBP Global, we work with SPAC sponsors, target-company CFOs, and de-SPAC management teams on exactly these questions — before they become filings. If you want to talk through your situation, reach out directly.

Drew Bernstein is co-chairman and co-founder of MBP Global and MarcumAsia. He has spent his career auditing cross-border and capital-markets transactions.