Special Purpose Acquisition Companies

About Special Purpose Acquisition Companies

SPACs, or blank check companies, raised a record 83 billion in 2020 and 162 billion in 2021. SPACs go public before having any business, then merge with private companies to take them public. The SPAC boom was fueled by low interest rates, celebrity sponsors, and regulatory loopholes. Most SPACs performed poorly after their mergers. Richard Branson, Shaquille ONeal, and Paul Ryan sponsored SPACs. By 2022, the SPAC market collapsed as investors lost billions. The SEC imposed stricter disclosure requirements. The SPAC boom and bust demonstrated that Wall Street innovation often outpaces regulation, leaving retail investors with losses.