Most SPACs lose money after finding a company to acquire, and they do so at an accelerating rate over the 12 months that follow a merger, Bloomberg reports. That’s according to The Edge Consulting Group, a team of analysts that covers special situations, which researched 115 SPACs that closed acquisitions between 2015 and the end of 2020.
IPOs by blank-check companies spiked during the pandemic. The listings snowballed some more when stocks pushed to new records in 2021. More than 120 SPACs have gone public already in 2021, raising nearly $40 billion for potential acquisitions, according to data compiled by Bloomberg. But, on average, they have underperformed traditional IPOs.
“What surprised us was how short-term these benefits are and how quickly the returns and outperformance drops off,” said Alex Korda, an analyst at the firm. “SPAC investors should adjust to focus on the post-merger sweet spot.” Read more.
