Speaking of SPACs. St. Bernard Software goes public

You may have missed it last week but a security company went public on Thursday. Without an IPO.

You may have missed it last week but a security company went public on Thursday. Without an IPO.  Saint Bernard Software, a San Diego based provider of web filtering and spam blocking software is now traded under the symbol SHQC.  How did they pull this off without an IPO?

Well, it is thanks to a strange little financial vehicle called a SPAC.  A Special Purpose Acquisition Corporation is set up as a so called blank check company and goes public based on a very loosely worded prospectus that identifies what kind of acquisition the new company is going to make. Presumably investors buy the highly speculative stock on the hopes that the company will make a wise purchase and the stock will take off.  In this case an ex security operations guy from Sun Microsystems, Humphrey Polanen, put together his SPAC, Sand Hill IT SecurityAcquisition Corp, in April of 2004 and spent 18 months looking for a suitable acquisition.  Their spin is that they looked at over 800 security companies before selecting St. Bernard as the best possible acquisition. My analysis is that this was probably more of a financial decision than a technology decision. The SPAC has brought $24 million to St. Bernard which is already a healthy little company serving the small to medium business market.  With a few acquisitions (using the newly gained currency of publicly traded stock) St Bernard can now add products and services that they can sell into their existing strong position in SMB.


Good luck to the newly public St. Bernard.  I am hoping more security start-ups look at reverse mergers such as this one as a way to go public. It is not as flashy as the traditional IPO and the VC’s do not get out at the top but it is less disruptive for management, and less painful for the employees.