![]() ![]() ![]() A sharp rise in the prevalence of “overfunded” trust accounts, particularly in the third and fourth quarters to 90% in the fourth quarter.While the SPAC IPO market has rebounded considerably during the fourth quarter of 2021, the terms of such IPOs have developed in a manner that is considerably more favorable to IPO investors, but, in many cases, in a manner that may reduce the likelihood of a successful de-SPAC transaction. There were 298 SPAC IPOs completed in the first quarter, declining to 60 in the second quarter, primarily as a result of the temporary slowdown resulting from the SEC staff’s April announcement of a change in interpretation of accounting requirements applicable to most SPAC warrants, as well as tightening of the PIPE market, rebounding to 89 in the third quarter and increasing further to 166 in the fourth quarter. The total number of SPAC IPOs reached record highs in 2021, increasing to 613 from 248 in 2020. We discuss key market trends, including changes in prevalent substantive terms of SPAC IPOs and de-SPAC transactions and regulatory, legislative and litigation challenges facing SPACs and potential target businesses during 2021 and the anticipated outlook for 2022 below. ![]() We expect the SPAC market to remain fluid and dynamic in 2022, continuously evolving to address market and regulatory challenges. While the SPAC market remains healthy and SPACs are likely to be a major asset class for the foreseeable future, SPACs are still a relatively young product in light of their resurgence in recent years after a long post-Great Recession absence. Nevertheless, market and regulatory challenges continue and are expected throughout 2022. 2021 was a record year for SPAC IPOs and the market for de-SPAC transactions also remained strong throughout the year. The SPAC market has withstood many challenges throughout 2021, including softening of the private investment in public equity (PIPE) market for a majority of the year after a very robust first quarter for initial business combinations (de-SPAC transactions) and several adverse regulatory developments. ![]()
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