How SPACs Should Respond To Increasing Scrutiny

This article was originally published in  Law360. Any opinions in this article are not those of Winston & Strawn or its clients. The opinions in this article are the authors' opinions only. 

In the past year, special purpose acquisition companies, or SPACs, have seen enormous growth in use and popularity.

SPACs are shell companies with no operations that proceed in two stages. First, the SPAC raises money through an initial public offering and places the proceeds in trust. Second, the SPAC then has a specified amount of time—usually two years—to find a private operating company to take public through a business combination known as a de-SPAC transaction.

In 2020, there were 248 SPAC IPOs, nearly five times the amount in 2019, and in 2021, there have already been 336 IPOs.¹