2020 and 2021 were a record year for SPAC IPO filings, even though they had been steadily growing in popularity over the last decade. In 2021, SPACs had raised capital in 613 IPOs in that year alone. A special purpose acquisition company (SPAC) is a company with no business operations which is set up for the sole purpose of raising capital through an initial public offering with the goal of buying an existing company. The U.S. ranked second globally in terms of traditional IPO numbers, with the highest number of traditional IPOs occurring in mainland China. In comparison, there were 31 SPAC IPOs in 2023, and 57 in 2024.. How have SPAC IPOs historically performed in the U.S.? From 2003 to 2019, the funds raised by SPAC IPOs remained somewhat consistent, with the value of funds never exceeding 11 billion U.S. dollars except in 2003 and 2019. SPAC IPOs raised the largest amount of funds between January and December 2021, with the value of funds raised surpassing 160 billion U.S. dollars. In the previous year, SPAC IPOs raised more funds than all preceding years combined. The U.S. vs Europe While SPAC IPOs in the U.S. have been slowly increasing over the past six years, numbers have remained significantly lower in Europe. Europe has still not seen annual SPAC IPO numbers exceed nine per year, while those in the U.S. have increased more each year, reaching a significant high-point in 2020 that is expected to be further surpassed by the end of 2021. During the first three months of 2021, less than five percent of SPAC IPOs completed globally came from Europe.

In 2021, SPAC IPOs in the United States raised almost twice as much as they raised in the previous year, reaching approximately *** billion U.S. dollars. In 2022, proceeds of SPAC IPOs surpassed 2017 and 2018 levels, however remained significantly lower than the last two years. A special purpose acquisition company (SPAC) is a company with no business operations which is set up for the sole purpose of raising capital through an initial public offering with the goal of buying an existing company. 2020 was a significant year for SPACs with a dramatic increase in the number of IPOs.

The SPAC bubble burst in the second quarter of 2021 after four consecutive quarters of growth, though the number of SPAC IPOs rose to 175 in the fourth quarter of 2021. However, the peak of the SPAC boom was reached when SPACs raised capital in 300 IPOs in the first quarter of 2021. In April 2021, the U.S. Securities and Exchange Commission (SEC) brought in new accounting rules for SPACs, which likely played a role in the drop in new SPAC IPO filings.

What are SPAC IPOs?

A special purpose acquisition company (SPAC) is a corporation formed for the sole purpose of raising investment capital through an initial public offering (IPO). The value of SPAC IPOs globally reached a record-high in February 2021, amounting to over 35 billion U.S. dollars. IPO underwriters are necessary to act as brokers between the issuing company and the investing public, and are usually investment banks. They essentially help the issuing company sell its initial set of shares. As of September 2021, the largest underwriters of SPAC IPOs globally were Citigroup, Goldman Sachs, and Credit Suisse.

SPAC IPOs in the United States

The number of SPAC IPOs in the United States has increased significantly in recent years. As of October 2021, SPACs had raised capital in a record number of IPOs. At the same time, the value of SPAC IPOs raised in the U.S. also peaked - amounting to a value of over 130 billion U.S. dollars. When compared to Europe, the vast majority of global proceeds from SPAC IPOs was raised in the United States.

February 2021 was a record month for both SPAC IPOs and SPAC mergers. SPACs, or special purpose acquisition companies, are public companies which raise money and then aim to merge with a private company, thus taking the target company public in the process. The value of SPAC IPOs reached 35.3 billion U.S. dollars in February 2021 and SPAC mergers were valued at 117 billion U.S. dollars. As of that month, only one third of SPAC merger deals announced in the United States had been completed.

The SPAC bubble burst in the second quarter of 2021 after five consecutive quarters of growth. The peak of the SPAC boom was reached when SPACs raised 82.8 billion U.S. dollars via IPOs in the first quarter of 2021. However, this number plummeted to only 11.9 billion U.S. dollars in the following quarter. In April 2021, the U.S. Securities and Exchange Commission (SEC) brought in new accounting rules for SPACs, which likely played a role in the drop in new SPAC IPO filings.

Most IPOs completed in the United States in 2021 were SPAC IPOs, which is marked shift from previous years. Only ** percent of IPOs were traditional IPOs in that year, down from ** percent in 2019. The number of U.S. SPAC IPOs accelerated in 2020 compared to previous years - growing by nearly *** since 2019 - and is expected to further increase in 2021. Meanwhile, the number of overall IPOs typically follows the trajectory of the economy as a whole with many in times of economic growth and fewer during periods of economic downturn.

2020 was the year of the SPAC, at least in the United States. The rapid increase in the number of IPOs via special purpose acquisition companies also led to an increase in lawsuits in the area from the third quarter of 2020. In January 2021 alone, there were seven lawsuits compared with 13 in the previous three months. This mirrors the timeline of the rise in the number of SPAC IPOs.

The annual number of SPAC IPOs completed has steadily increased between 2015 and 2021 in the United States. In Europe, SPAC IPOs remained relatively rare, with the highest number of completed SPAC IPOs being reported in 2017. Meanwhile, the U.S. is experiencing a boom in both the number and volume of money raised by SPACs. Special purpose acquisition companies are public companies with neither a specific business plan, nor a product or service to sell. The specific purpose of SPACs is to raise capital and then merge with, or acquire a private company. An initial public offering (IPO) refers to the process of a private company obtaining capital by offering shares through the primary market.

In 2021, SPAC IPO proceeds accounted for 49 percent of total IPO proceeds in the United States. Only 51 percent of IPOs were traditional IPOs in that year, down from 79 percent in 2019. SPAC IPOs have been around for years, but the amount raised grew significantly in 2020 and 2021. Meanwhile, the size of traditional IPOs tends to mirror the economy as a whole.

February 2021 was the strongest month yet for SPAC acquisitions globally when the value of these deals exceeded 100 billion U.S. dollars. In contrast, the total value of SPAC acquisitions amounted to 152 billion U.S. dollars for the entire year of 2020. A special purpose acquisition company (SPAC) is a company with no business operations which is set up for the sole purpose of raising capital through an initial public offering with the goal of buying an existing company. Historical data shows that the average initial returns after SPAC IPOs can vary, though have been generally positive over the past two decades.

In 2023, Goldman Sachs & Co. was the leading financial advisor on SPAC acquisitions in the United States in terms of the transaction value of deals completed. The rise of special purpose acquisition company (SPAC) acquisitions is creating new business for many of the world's largest investment banks, and the U.S. was the most active region for SPAC IPOs globally in 2023. The total value of deals Goldman Sachs & Co advised on exceeded 631 billion U.S. dollars. Rise in popularity of SPACs since 2020 SPACs are public companies with no commercial operations, which raise money from investors via an IPO and then aim to merge or acquire a private company. This allows the private company to go public outside of the traditional IPO process, which is generally slower and involves a lengthier auditing process. The number of SPAC IPOs in the U.S. rapidly increased in 2020 and they remained a popular option for a private company to get listed in 2021. Significantly more money was raised during this time, which means that the SPACs had greater capital to invest into their subsequent M&A deals with private companies. Which sectors are the most popular targets for SPACs? SPACs having more capital on hand has also increased the size of SPAC M&A deals globally. SPACs typically target private companies in a particular sector for acquisitions. In 2020, SPACs in the U.S. targeting the technology sector raised significantly more funds than those targeting other sectors.

The value of SPAC IPOs completed in Asia in the first three months of 2021 amounted to almost double the value of those completed in the entire previous year. Between January and March 2021, Asia-targeted SPACs raised 2.7 billion U.S. dollars, up from 1.4 billion U.S. dollars in the previous 12 months. In 2020, South Korea was home to the highest number of SPAC IPOs in the region.

On March 26, 2024, Truth Social entered the public market via the SPAC merger of Trump Media & Technology Group with the Digital World Acquisition Corp, at a valuation of eight billion U.S. dollars. The U.S.- based mortgage company Better.com, which went public via SPAC merger with the Aurora Acquisition Corp. in August 2023, enjoyed the implied valuation of almost seven billion U.S. dollars, despite having seen its profits deteriorate in the previous year.

SPAC mergers in the alt-tech scene SPAC mergers have become an increasingly common way for non-mainstream social media companies and alt-tech platforms to enter the public market. The number of Truth Social app downloads in the United States barely reached 100 thousand in February 2024. Despite this, Truth Social had a grandiose market debut, peaking at almost 80 U.S. dollars per share. Launched in February 2022, Truth Social is a microblogging platform that proposes to uphold freedom of expression by giving voice to the alt-right political figures in the American public debate. Similarly, online video platform Rumble, which monetizes content from creators such as Andrew Tate and Russell Brand, chose to go public via a SPAC merger with CF Acquisition Corp VI on September 15, 2022. The quarterly revenue generated by Rumble was almost 18 million U.S. dollars in the third quarter of 2023, down by 30 percent compared to the previous period. In comparison, the hours of uploaded video content on Rumble keep climbing to increasingly high output results, a sign that content creators have been using the platform more than in previous years.

Latest social media IPOs March 2024 marked the resurgence of social media IPOs. On March 21, 2024, social forum Reddit began officially trading on the New York exchange. The platform, which was launched in 2005, first expressed its wish to go public in December 2021. Reddit was valued at 6.5 billion U.S. dollars in its pre-IPO stand, but managed to surpass a 10 billion valuation after its market debut. Within the ranking of estimated valuation of selected social media platforms at their entrance into the public market, Reddit positions itself in the mid to low tier of the scale. Former president Donald Trump’s Truth Social, which went public via a SPAC merger in the same month, enjoyed a valuation of approximately eight billion U.S. dollars. The largest social media IPO recorded in the last 15 years was Facebook, which went public at a valuation of 104 billion U.S. dollars. Among the companies that have expressed the will to go public, communication and social networking platform Discord Inc. stands out thanks to its estimated 2022 valuation at 10 billion U.S. dollars.

The total number of initial public offerings (IPOs) in the United States fluctuated considerably between 2008 and 2020. There has been an increase in the number of special purpose acquisition company (SPAC) IPOs during the last five years, from 13 SPACS in 2016 to 248 SPACs in 2020. Until 2020, the IPO scene was largely dominated by traditional IPOs. The distribution of proceeds was somewhat evenly split between traditional and SPAC IPOs in the U.S. as of 2020.

In the first quarter of 2021, approximately 98 percent of global proceeds from special purpose acquisition company (SPAC) IPOs were raised in the United States. The value of SPAC IPOs in the U.S. reached 93.4 billion U.S. dollars in this period. In 2020, traditional IPOs had stronger equity returns than SPAC mergers.

The value of SPAC IPOs completed in Europe fluctuated significantly between 2010 and 2020. In 2019, the value of European companies who went public via SPAC amounted to 350 million U.S. dollars, a decrease of 800 million U.S. dollars from the previous year. There were no reported SPAC IPOs completed in 2012, 2014, and 2020. Meanwhile, 2020 was a landmark year for SPAC IPOs in the United States with the total value exceeding 83 billion U.S. dollars.

IPO: SPAC vs traditional Special purpose acquisition companies are public companies with neither a specific business plan, nor a product or service to sell. The specific purpose of SPACs is to raise capital and then merge with, or acquire a private company. This allows the private company to go public without going through the usual process of filing for an IPO, which typically takes longer and is more expensive. However, the equity returns of IPOs were almost double those of SPAC mergers in 2020.

Why are SPACs less common in Europe?
Despite the boom in SPACs across the pond, Europe has been slow to jump on the SPAC bandwagon. The U.S. has historically been home to more tech companies than Europe, which also means that fewer venture capital-backed IPO exits take place in Europe. This makes it harder for investors to analyze the potential returns a firm in the sector could generate.

All but seven special purpose acquisition company (SPAC) IPOs completed globally in the first quarter 2021 were completed in the United States. The seven remaining deals were closed in Europe, and took place across only four stock exchanges. Special purpose acquisition companies are public companies with neither a specific business plan, nor a product or service to sell.

Approximately four times more SPAC IPOs were completed in South Korea compared with Mainland China in 2020. The number of SPACs listed reached 19 in South Korea making it the Asia-Pacific territory with the highest number of SPAC IPOs in that year. Meanwhile, almost 250 SPAC IPOs took place in the United States in the same year. A special purpose acquisition company (SPAC) is a company with no business operations which is set up for the sole purpose of raising capital through an initial public offering with the goal of buying an existing company.

European SPACs listed on stock exchanges in the United States raised twice as much as those which listed on European exchanges in the first two months of 2021. Special purpose acquisition companies (SPACs) listed in Europe raised 2.5 billion U.S. dollars in 2017, which remains the year with the most SPAC activity in Europe over the past decade. Special purpose acquisition companies are public companies with neither a specific business plan, nor a product or service to sell. The specific purpose of SPACs is to raise capital and then merge with, or acquire a private company.

In 2020, the SPAC strategy was more successful than the S&P strategy in improving share performance value both before and after a merger has taken place. That year, SPAC share values grew by 46 percent pre-merger and 16 percent post-merger. On the other hand, the growth of S&P share values was much smaller, with an increase of 20 percent pre-merger and 13 percent post-merger. However, the S&P strategy proved to be more successful in the three years preceding the time period observed.