SPACs have come to a crossroads. SPAC IPOs are on pace this quarter to raise about $2 billion on 18 registrations. If that forecast holds, it will represent a staggering decline of 94% (from 299 to 18) in the number of new listings from the record-setting first quarter of 2021, and a dive of 98% (from $98.3 billion to about $2 billion) in the value of SPAC IPOs, Bloomber Law reports in an analysis of the market.
In response to complaints against SPACs, the SEC has proposed harsh new rules that, if adopted, have the potential to effectively put SPACs out of business.
How might SPACs have done things differently to avoid their current, dire circumstances—and, more important, what can they do now? One possible future niche for the industry is that SPACs may provide a back-up for when a company is not quite ready to go public, as was the case with WeWork.
Some additional guardrails that could help to better align the interests of SPAC sponsors and investors are overdue, according to Bloomberg. Those changes, even if implemented now, might help SPACs navigate today’s challenging legal environment under the Gary Gensler-led Commission to emerge as a stronger industry when market conditions improve. Read more.
