special purpose acquisition company

SPACs seem to be having their moment in the financial world, especially in 2021.  In less than three months, U.S.-based SPACs have raised more money – almost $88 billion – than all SPACs combined in 2020 (which held the previous high for SPAC investment by some margin).  They have even reached a level of societal notoriety, as shown by this week’s cover of New York Magazine.  However, before SPACs and their supporters can carry this trend “to the moon,” the SEC chose this week to release two notices bringing SPAC fans back to earth.

In the financial world, 2020 was the year of the SPAC. During the past few years, many Silicon Valley start-ups were chomping at the bit to get listed and cash out via initial public offering (IPO). And in 2020, over half of the companies that went public did so using a SPAC. Exchanges are also getting in on the fun, with at least three SPAC ETFs hitting the stock exchange in the past few months.