{"id":1669,"date":"2020-08-14T22:23:00","date_gmt":"2020-08-15T03:23:00","guid":{"rendered":"https:\/\/www.mgocpa.com\/?post_type=perspective&p=1669"},"modified":"2025-06-25T16:16:46","modified_gmt":"2025-06-25T21:16:46","slug":"spacs-continue-to-surge-the-new-path-to-public","status":"publish","type":"perspective","link":"https:\/\/www.mgocpa.com\/perspective\/spacs-continue-to-surge-the-new-path-to-public\/","title":{"rendered":"SPACs Surge: A New Route to Public Markets"},"content":{"rendered":"\n

In a year defined by historic economic and social disruption, traditional paths to raising capital have largely shuddered to a halt. Yet many businesses, whether growing or struggling, need capital now more than ever. Filling the role typically held by the initial public offering (IPO) and reverse takeover (RTO) processes, Special Purpose Acquisition Companies (SPACs) have stormed back to prominence on Wall Street by raising capital at a record pace \u2026 and then injecting those funds into capital-needy industries and companies. With traditional M&A and IPO opportunities stalled, the return of the so-called \u201cBlank Check Companies\u201d couldn\u2019t be more timely.<\/p>\n\n\n\n

Mergers with SPACs have always been an alternative to traditional IPOs. With the IPO market effectively minimized for the time being, SPAC mergers are an increasingly desirable public market liquidity option for private companies.<\/p>\n\n\n\n

What the Numbers Tell Us<\/h2>\n\n\n\n

2020 is a record-shattering year for a revitalized SPAC market. According to data provided by ELLO Capital, there have been 95 SPAC IPOs so far in 2020, raising $37.8 billion (average size: $397 million). That compares with 59 in all of 2019, which raised $13.6 billion (average size: $230 million).<\/p>\n\n\n\n

On July 22, 2020, Pershing Square founder Bill Ackman raised $4 billion in the IPO of Pershing Square Tontine Holdings Ltd., the largest SPAC IPO to date. With an initial target of $3 billion, the SPAC included a unique pricing approach: a fixed pool of warrants to be distributed to shareholders who accept a subsequent deal \u2013 increasing the take for approvers.<\/p>\n\n\n\n

“COVID-19 is likely a direct cause of the acceleration in SPACs this year, as global lockdown policies have restricted travel and the ability to do roadshows. As a result, SPACs have largely replaced traditional IPOs,” said Mark Young, co-founding partner of Bridge Point Capital<\/a>. “Plus, SPACS appeal to the high-growth technology sector, which has led the market recovery post-February correction, and continue to drive growth in the work-from-home economy.”<\/p>\n\n\n\n

SPACs: Rules of the Road<\/h2>\n\n\n\n