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SPACs experience slowdown after increased SEC attention, but will it last?

  • Market Insight 5 August 2021 5 August 2021
  • Americas

Special purpose acquisition companies, or SPACs, exploded in popularity in 2021. Although SPAC activity spiked in the first quarter of 2021, with the issuance of 298 SPACs raising approximately $88 billion in capital,1 the market slowed significantly, but remained robust, in the second quarter with 60 SPACs raising $12.8 billion.2 According to SPACTrack, as of July 27, 2021, there were 570 active SPACs looking for target companies to acquire, with approximately $170 billion in capital at the ready. Although the SPAC frenzy has cooled significantly in recent months as the Securities and Exchange Commission (“SEC”) has issued multiple alerts, statements and guidance, including guidance regarding the accounting treatment of warrants, it is not clear that a similar cooling of SPAC-related litigation will result.

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[1] https://www.businesswire.com/news/home/20210407005635/en/ICR-the-Leading-SPAC-Advisor-Publishes-Q1-2021-SPAC-Market-Update

[2] https://www.businesswire.com/news/home/20210714005638/en/ICR-the-Leading-SPAC-Communications-and-Advisory-Firm-Publishes-Q2-2021-SPAC-Market-Update

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