It’s also not clear if the hot SPACs of today will continue to be Wall Street darlings in the future. IPOs still make more sense for some private firms But all of this points to a frothy market.” “SPACs are a fast-track IPO, and there is an insatiable appetite for new stocks. “Companies are being opportunistic and using their stock as currency to buy up other firms,” Lowenstein added. “The success of SPACs is a sign of excessive prices,” said Todd Lowenstein, managing director and equity strategy executive of The Private Bank At Union Bank. That means the parade of SPACs probably won’t end any time soon. Haddad added that the success of Virgin Galactic, DraftKings and other high-profile SPACs is also helping to convince more companies to go public via this route. Hail Mary: 'The Rock' buys the XFL for $15 million Steve Dietl/NBC/NBCU Photo Bank/Getty Images There is a better track record and history and more credible, high-value targets,” said Bill Haddad, a partner in the corporate practice of law firm Venable LLP who has worked on SPAC deals.
“The gene pool for SPACs has gone up because there are stronger companies doing these deals. The belief was that if you needed to go public through a reverse merger with an already existing shell company, then you probably weren’t healthy enough to do a more traditional IPO. There was a time when investors viewed SPAC deals with derision. The fact that blue-chip companies backed by the likes of Branson and Ackman are embracing SPACs has also helped erase some of the stigma. “There’s less uncertainty and a faster time to close deals.” “The advantages that SPACs have are even more compelling because of Covid-19,” said Bob Blee, head of corporate finance at Silicon Valley Bank. That’s especially the case during the coronavirus pandemic.īlank check deals are faster way to go public Plenty of private companies would rather merge with a blank check firm than go through the time-consuming and expensive process of raising money through a more traditional initial public offering. So why are so many SPACs rushing to go public? Electric truck maker Lordstown Motors is going public
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