About STACs
Structured Trust Acquisition Companies (STACs) represent one of the more recent developments in the effort to take private equity investments and manage and grow them as part of a public vehicle with access to the public capital markets. Since the beginning of 2005, two STACs – Macquarie Infrastructure Company Trust and Compass Diversified Trust – have consummated IPOs, raising over $700 million in equity capital, which was immediately used to acquire previously earmarked private businesses.
The result of a desire to achieve specific goals that are not available using traditional investment vehicles, STACs borrow heavily from the concepts and principles present in existing investment structures. STACs also implement innovative organizational and structural features to achieve specific business, operational and financial objectives. As a result, STACs are best understood through their distinguishing characteristics, such as the following:
- Unlike other public operating companies, STACs are structured using a Delaware statutory trust and a Delaware limited liability company;
- Unlike other public operating companies, the day-to-day business and affairs of STACs are externally managed;
- Unlike BDCs, STACs are not subject to the Investment Company Act; and
- Unlike SPACs, STACs have specific target acquisitions that are consummated in conjunction with the completion of their initial public offerings.
Without much operating and market history to draw upon, it is unclear the extent to which the STAC structure will gain widespread acceptance in the investment and financial communities. However, the STAC structure offers distinct benefits to investors and private equity managers over other investment vehicles and, as a result, offers a unique perspective on the latest trend of using non-traditional means to take private equity public.
To request a DVD of the STAC Webcast, please e-mail .
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