The Special Purpose Acquisition Company, or SPAC, has been a hot topic over the past 18 months. This type of company has seen a lot of action in the market, and there have been some big successes (and failures) among them. I’ve had the opportunity to work with a number of firms, individuals and other groups in various stages of SPAC transactions, so I thought I would share my insights on what’s happened in the market over this time period. In this blog post, I’ll give you a brief history of SPACs and explain what’s been happening in the market lately.
SPACs have been around for a while, but they gained popularity in the past few years as a way to take companies public without going through the traditional IPO process. A SPAC is created by a group of investors who pool their money together to buy a private company. The private company then becomes a publicly-traded entity, and the investors who created the SPAC receive a share of the company.
SPACs became popular because they were seen as a way to avoid some of the pitfalls of the IPO process. For example, traditional IPOs can be very expensive and time-consuming, and they often involve a lot of regulatory scrutiny. With a SPAC, the process is typically quicker and less expensive. In addition, SPACs can provide a way for companies to go public without giving up control to outside investors.
The market for SPACs really took off in 2020, with over $83 billion being raised through this method. This was more than double the amount raised in 2019, and it was a record-breaking year for SPACs.
However, the market has cooled off considerably in 2021, with only $13. six billion being raised through SPACs so far this year. This is due to a number of factors, including increased regulation from the SEC and a general decrease in investor interest.
It will be interesting to see how the SPAC market develops over the next few years. For now, it seems like the market is in a bit of a lull, but that could change at any time. I’ll be sure to keep you updated on what happens with this fascinating investment vehicle. Thanks for reading!
Do you have any thoughts or questions about SPACs? Let me know in the comments below!