July 22, 2021

SPACs: Down But Not Out

According to this excerpt from EY’s Global IPO Trends Report, despite the slowdown in SPAC IPOs due to the recent regulatory unpleasantness, there are plenty more deals to come:

– While SPAC formation frenzy has slowed from record levels, the lull caused by the SEC guidance is behind us and deals are being announced daily. SPAC activity is expected to remain steady over the next couple of months, picking up speed in Q3 2021 and toward the end of the year.

– There are nearly 300 SPACs on file that have not yet priced; indicating there are SPACs that are rushing to find suitable targets. High-quality target companies could have stronger bargaining power that will enable them to secure more favorable terms.

– With more scrutiny from the SEC, along with improved aftermarket performance, we can expect more quality SPAC deals being announced and executed, which is good news for investors.

More quality SPAC deals may be good news for investors, but I bet short sellers are still licking their chops at the prospect of the SPAC assembly line cranking up again.

John Jenkins