THE FUTURE OF FINANCE Conference : SPACs

We will hear from Jay Ritter, Professor of Finance, Warrington College of Business how Special Purpose Acquisition Companies (SPACs) have boomed in the U.S., with over 600 SPAC IPOs raising more than $160 billion in 2021 alone.These shell companies then search for a private operating company to merge with, in the process injecting cash and listing it on an exchange. Thus, a SPAC merger is an alternative to a traditional IPO for the operating company. SPACs have been very controversial, due to poor post-merger returns and the middlemen (the SPAC sponsor and underwriters) taking a big slice of the pie. Jay will discuss the economic rationale for some of the features that are used.