Getting SPACs right: How to build investor trust while mitigating litigation risk
Blank-check companies, or special purpose acquisition companies, known as SPACs, are thriving in corporate finance. SPACs have rapidly become a popular mechanism to take companies public. SPACs and traditional IPOs each raised about $80 billion in 2020. In January and February of this year, however, SPACs have overtaken IPOs by almost $40 billion. This exciting reemergence into capital markets, from lucrative transactions with popular companies to an array of celebrity endorsements, may be due in part to SPACs ability to raise capital and bring companies public without some of the uncertainty of the IPO process whereby share prices are set by supply and demand at the time of offering.