Publications

Time to Add SPACs to Your Repertoire?

Summer 2008
Michael R. Littenberg
Private Equity Developments - Summer 2008

The previously red-hot market for special purpose acquisition companies, or SPACs, succumbed to the general market malaise in the second quarter of 2008. This was in sharp contrast to the first quarter, which saw 12 SPACs successfully raise over $3 billion and approximately 30 new SPACs filed with the SEC.

In the few weeks prior to presstime, however, there have been encouraging signs that some life may be returning to the SPAC market. A new SPAC—formed by a promoter with significant experience in that SPAC’s target industry—priced during late June 2008 and raised $220 million. Three other new SPACs filed registration statements during that month. In addition, the last few months saw announcements of several initial business combinations that the SPAC sponsors hope will have sufficiently attractive economics to win shareholder approval. Industry watchers expect that a string of successful initial business combinations will help to break the logjam in new SPAC issuances.