SPACs embarked on their newly commendable street in the mid-2010s.
Their numbers swelled in 2020. As of early October 2020, SPACs have established 128 IPOs, raising a total of $49.1 billion, based on SPAC Research, which gathers information on SPACs. That is up from 2019 when just 59 SPACs raised a total of $13.6 billion.
Surely, the COVID-19 pandemic has been a factor. SPACs tend to fare better in periods of stock exchange decline due to the way they work.
Also, when compared with a traditional IPO, SPACs offer certain benefits to sponsor-organizers as well as the companies who want to go people. One is the streamlined disclosure requirements that save money, time, and trees.
SPAC IPOs are additional turbocharged since there are fewer people involved. A traditional IPO involves”multiple shareholders negotiating with issuers and underwriters simultaneously, about particular terms like the offering price, executive compensation, underwriter rights, and multiple different topics,” says Tyler Gellasch, executive director of Healthy Markets Association, a nonprofit, investor educational coalition. “But at a SPAC, it’s often only the host and the target firm at the table.”
So deals can move faster.