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Deal Pipeline For Slumping IPOs and SPACs Suggests Rebound May Be Coming

21 May 2021

Mitchell Presser and Justin Salon spoke to PYMNTS about the current landscape for special purpose acquisition companies (SPACs).

According to Mitchell, the appeal of SPACs is because the SPAC is already publicly traded, making the process of the de-SPAC merger – and therefore the effective public listing of the target company – “is shortened from what is usually at least a six- to seven-month process to a period closer to three or four months.”

Justin weighed in on the regulatory climate, noting that recent SEC bulletins are meant to “remind market participants that SPAC IPOs and de-SPAC transitions are subject to existing federal securities laws that must be considered carefully in the context of these transactions.” He stated that the SEC statements, from the end of March into April, “did not materially affect the SPAC market, but did cause sponsors, lawyers, and bankers to think more carefully about their disclosures to ensure clarity and completeness.”

“The market for SPAC IPOs still isn’t very constructive at the moment, and very few deals are getting done,” Justin added. “Those that are getting done are relying on non-traditional SPAC investors, changing the structure of their deals or downsizing their deals at pricing…while we don’t expect the same level of activity as we saw in the first quarter of 2021, we are optimistic that the second half of the year will see a more sustainable level of deal activity in the SPAC space.”

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