Tag Archives: Special Purpose Acquisition Companies

Apr 15, 2021

Special Purpose Acquisition Companies (SPACs) – Part IV

In our previous blog, we’ve shown that SPACs tend to be small- and micro-cap companies that have low liquidity. Following the same framework, in this blog we will analyze SPACs’ performance. We found that relative to S&P SmallCap 600®, active SPACs underperformed when seeking the target, delivered abnormal returns during the deal announcement period, and…

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Apr 12, 2021

Special Purpose Acquisition Companies (SPACs) – Part III

In our previous blog (part II), we introduced SPACs’ lifecycles, as well as the potential benefits and risks of investing in SPACs. In this blog, we will focus on SPACs’ liquidity. In general SPACs’ liquidity is poor when seeking the target, surges on the deal announcement date, and remains low relative to the S&P SmallCap…

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Mar 23, 2021

Special Purpose Acquisition Companies (SPACs) – Part II

In the previous blog, we introduced SPACs and discussed market trends that emerged given SPACs’ popularity. In this blog, we will discuss SPACs’ lifecycle, as well as the benefits and risks of investing in SPACs. SPAC Life Cycle There are three stages in a typical SPAC life cycle. 1. A SPAC’s IPO When SPAC sponsors…

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Mar 5, 2021

Special Purpose Acquisition Companies (SPACs) – Part I

SPACs have been raising funds faster than ever before. In 2020, SPACs raised close to USD 100 billion in public offerings, which is more than in the prior 10 years combined (see Exhibit 1); the average IPO size also doubled from 2019 (see Exhibit 2). On July 22, 2020, Bill Ackman’s Pershing Square Capital Management…

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