The once red-hot SPAC market is becoming a fertile ground for activist investors who push for changes at problematic companies and profit from them, CNBC reports.
A record number of companies went public over the past two years by merging with SPACs. New to the public markets and often underperforming, industry experts believe these companies could increasingly become vulnerable to activist involvement.
“It makes sense that they would look at SPACs because oftentimes when the de-SPAC M&A happens, the stock would drop 10% or 15% even in the best of cases,” said Perrie Weiner, partner at Baker McKenzie. “There might be buying opportunities and activists might be able to do well. For SPACs when they first get off the ground, it takes a while to get their feet under them and sometimes the management teams aren’t as good as they should be.” Read more.
