The number of IPOs involving SPACs has increased significantly in recent years, notes the law firm Dorsey & Whitney. For example, from 2019 to 2021, the number has increased by about a factor of 10. Yet not long ago these investment vehicles were called “blank check” entities because investors purchased shares not based on valuing the business the firm may be in but rather who will pick the business – the only business of the blank check company has is to invest the money entrusted to the vehicle by the public in a business selected by the insiders. That contrasts sharply with the traditional IPO.
While the number of IPO’s involving SPACs has increased, the SEC has made it more than clear that these vehicles are not favored. The article explores issues of SPAC disclosure and where more stringent federal securities regulations may come into play. Read more.
