The Return Of The SPAC

From a capital markets perspective, 2020 has been defined by some as "The Year of the SPAC."¹ A special purpose acquisition company ("SPAC") is a company with no operating business that is created to raise capital in an initial public offering ("IPO") with the purpose of using the proceeds to acquire a target business or asset to be identified following the completion of the IPO. A SPAC is also referred to as a "blank cheque" company as investors have limited or no visibility of the acquisition target at the time of the IPO. While such vehicles have been used for several decades, Canadian and U.S. markets have witnessed a resurgence in their popularity in recent years, with high-profile deals led by Chamath Palihapitiya (Virgin Galactic) and Bill Ackman (Square Tontine Holdings, Ltd.) to name just a few. To date in 2020, 141 SPACs have gone public to raise $54.4 billion, eclipsing the 59 SPAC IPOs that raised $13.6 billion in 2019.² Increasingly, private companies have