"SPAC announces deal" can mean three different things, and the difference is most of the risk. A letter of intent (LOI) commits almost nothing. A definitive agreement (DA) commits both sides to try. Only closing commits anyone to an actual merged company. Prices react at every stage; obligations only exist at the last two.
Stage 1 — Letter of intent: an agreement to negotiate
An LOI (or memorandum of understanding) is a mostly non-binding term sheet: target, rough valuation, exclusivity period. The genuinely binding parts are usually just exclusivity and confidentiality. SPACs often announce LOIs by press release and 8-K (the SEC's current-events report) because it signals progress to a market that may be pricing in liquidation.
Read an LOI announcement for what it is: we found someone willing to talk exclusively. Valuations quoted at LOI stage frequently change — or evaporate. Treat the announced number as an opening bid, and note that a share's floor at this stage is still simply its trust value (see why below trust matters).
Stage 2 — Definitive agreement: signed, with exits built in
The business combination agreement (BCA) — the definitive agreement — is a real, binding contract, filed publicly as an exhibit to an 8-K. From the moment it's signed, both sides are obliged to work toward closing. But the contract itself contains the ways out, and they matter more than the headline:
- Minimum-cash condition. The target can walk if redemptions leave the trust below a stated figure. This is the single most deal-lethal clause in the modern SPAC era, because 80–95% redemption rates are normal (see the real numbers in how redemption works).
- Outside date. The contractual deadline after which either party may terminate.
- Financing conditions. A PIPE (a private placement of shares to institutions, arranged to backfill redemptions) that fails to fund can kill an otherwise-approved deal.
- Termination fees. Sometimes payable, often small relative to the deal.
A live example from our records: Inflection Point Acquisition Corp. VI (IPFX) signed its definitive agreement with Quantum Space, announced June 8, 2026 (8-K, SEC accession 0001213900-26-066027) — a $1.2 billion headline valuation carrying a $90 million minimum-cash condition and a $300 million PIPE. Each of those numbers is a separate way the deal can live or die, and the headline is the least binding of the three. (The headline also understates the real valuation — that arithmetic is in dilution: headline vs effective.)
Stage 3 — The gauntlet between signing and closing
A signed deal then runs a public, dated obstacle course, visible filing by filing:
- S-4 / proxy drafting and SEC review — the merger registration statement, often amended several times over months.
- Definitive proxy (DEFM14A) — the meeting is scheduled; the redemption deadline is now a hard date.
- Redemption window closes — typically two business days before the meeting, with your broker's cutoff earlier still (the two-day trap).
- Shareholder vote — approval is common; the real question is how much cash survived redemptions.
- Closing — the merger completes, the ticker changes, and a "Super 8-K" files within four business days with the details of the combined company.
A complete, real timeline from our data — D. Boral ARC Acquisition I (BCAR) and Exascale Labs: deal announced January 11, 2026 ($500M headline); S-4 filed and amended through June; definitive proxy July 7 (accession 0001829126-26-007326); redemption deadline July 27; vote held July 29 — approved, with 95.9% of public shares redeeming (8-K, accession 0001829126-26-008043). Announcement to vote: about six and a half months. That pace is typical; closings four to nine months after announcement are the norm, not the exception.
What this means for how you read headlines
- "Announced" ≠ "happening." Track a deal by its next dated milestone, not its press release — our upcoming mergers list sorts by exactly that.
- The redemption right survives until the vote. Whatever you think of the deal, you keep the option to take trust value until the final window. That option, not the deal, is the floor under the price.
- After the vote, everything changes. Approval consumes the last redemption window; the floor is gone and the shares become a bet on the merged company — the regime change we document in the floor disappears.
One habit separates people who read SPACs well from people who read press releases: follow the filings, in order, with dates. The stages above are the entire map.