About SPACs
Special Purpose Acquisition Companies, commonly known as "SPACs," have recently surged in popularity as an alternative to traditional acquisition vehicles, due to their ability to raise capital through the public equity markets. Formed for the purpose of acquiring one or more operating companies in a particular sector, since 2003, approximately $21.9 billion of SPAC capital has been raised and more than 160 SPACs have been funded in the United States. Approximately 80 SPACs are currently on file with the SEC, representing over $13.4 billion in future financings. There has been a trend toward larger SPAC IPOs, with the average SPAC IPO size of nearly $136 million since 2003. In 2007, 66 SPACs raised more than $12 billion, with an average deal size of $183 million and in 2008, 17 SPACs raised more than $3.8 billion, with an average deal size of $226 million.
Despite their recently demonstrated potential to raise significant amounts of public equity, though, SPACs have not yet gained widespread acceptance within the financial and investment communities, due in part to their unique, and often misunderstood structure. The question remains whether SPACs will become an accepted way to access the public markets, or if they will instead remain a novel capital raising vehicle.
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To view the presentation on "The BDC Alternative," please click here.
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