9 - 7 2 1 -4 5 6

JUNE 24, 2021

JOHN R. WELLS

BENJAMIN WEINSTOCK

SPAC Space
Introduction
In 2020, over half of all initial public offerings (IPOs) in the United States were special purpose
acquisition companies (SPACs), blank-check companies that typically had two years to find a business
to take public, usually through a reverse merger. Together, 248 SPACs raised over $83 billion, 46% of
the total US IPO proceeds in 2020. 1 The SPAC boom accelerated in 2021. By the end of March 2021,
there were 298 SPAC IPOs year-to-date, raising $96.6 billion. 2 At the time, SPAC sponsors were eagerly
seeking out opportunities in sectors such as fintech, healthtech, renewable energy, and electric vehicles
to invest the $136 billion they had at their disposal. 3 Moreover, there was another $66.4 billion in SPAC
IPOs in the pipeline. 4

The opportunities for SPAC sponsors were attractive, as much as a ten-times return on their
investment, but SPAC investors had also made some spectacular returns. For instance, Luminar
Technologies, a leading producer of sensor technology for autonomous vehicles, entered into a
definitive agreement with a SPAC in August 2020, for a post money valuation of $3.4 billion. 5 At the
end of March 2021, it was valued at $8.3 billion, down from a day-end high of $13.5 billion, but still up
135% on flotation. 6

Proponents of SPACs touted a more efficient and streamlined path to public markets compared to
the traditional IPO process – a type of “regulatory arbitrage.” 7 There was also the benefit of giving
retail investors opportunities that would be otherwise reserved for private equity and institutional
investors. Yet many industry observers were skeptical of the SPAC boom, noting the misalignment
between sponsor and shareholder interests, the opacity of the process, and the poor historic returns of
the entire asset class. They believed that the SPAC boom would soon end. 8

For private companies in the most popular target sectors, SPACs offered a way to tap into large
amounts of public capital, but they also required that the company enter the public markets with all
the scrutiny and oversight this implied. While a SPAC might deliver higher valuations at lower cost,
perhaps private equity made more sense.

Professor John R. Wells and Research Associate Benjamin Weinstock prepared this note as the basis for class discussion.

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 721-456 SPAC Space

History of SPACs
The concept of a “blank-check” company was not new. In 1881, Henry Villard raised millions of
dollars in a “blind pool” to acquire an unnamed target company, whose identity Villard promised to
reveal in 90 days. Investors clambered to invest, and the pool sold out in less than 24 hours. 9

Two hundred years later, in the 1980s, the number of blank-check companies boomed, often being
used to commit penny stock fraud. To address the issue, the United States Congress enacted the Penny
Stock Reform Act in 1990, which, in combination with state legislation, put considerable restrictions on
the role of blank-check companies in public equity markets. 10

Then, in 1992, David Nussbaum, the CEO of GKN Securities, created a new type of blank-check
company that included more protections for investors. He called it a “special purpose acquisition
company,” or SPAC. GKN ultimately brought 13 SPACs to market in the 1990s.11 However, they soon
ran into trouble, when, in 1997, the National Association of Securities Dealers (NASD) levied over $2
million in fines for GKN’s price gouging practices. 12

After this incident, SPACs were largely absent from public markets through the dotcom boom, but
reemerged following the crash in the early-mid 2000s. A key player in the SPAC comeback was
Nussbaum, who reintroduced the instrument in 2003 as the head of EarlyBirdCapital. 13

By 2007, the number of SPAC IPOs had grown steadily to a peak of 66 per year, representing 14%
of IPO proceeds, but during the global financial crisis of 2007-2008, SPACs once again fell out of favor,
with no more than 20 SPAC IPOs in a given year between 2008 and 2016. 14

In 2016, the number of SPAC IPOs began to grow steadily, as sponsors offered increasingly
favorable terms for IPO investors, who were eager to participate in the seemingly unstoppable bull
market. 15 By 2019, the number of SPAC IPOs reached 59 per year, up substantially from recent lows
but still below the 2007 peak. The following year – 2020 – would see a 320% increase in the number of
SPAC IPOs, and the acceleration continued into 2021. 16

The Basic Mechanics of a SPAC

Sponsors raised money in an IPO with the goal of combining with a private company. Because the
target was unknown, sponsors usually had to be high-profile and well-trusted to raise funds.
Sometimes, the sponsors would give investors a sector focus (e.g. tech, healthcare, electric vehicles) but
were not required to do so. The SPAC shareholders voted on any proposed combination. After the IPO,
the sponsors had up to two years to combine with an entity, after which the money raised, along with
accrued interest, had to be returned to shareholders. This period could be extended by shareholder
vote.

The typical amount raised for a SPAC in 2020/2021 was $250 – $500 million. This money was put
in trust to be transferred to the target company. Sponsors contributed additional cash to the SPAC for
the search and administrative costs. In return, the sponsors received the equivalent of 20% of the equity
stake received by the SPAC in the combined entity. For instance, a SPAC that raised $500 million might
combine with an entity for a post-combination value of $2.5 billion. The company received the $500
million in return for 20% of its equity. The investors in the SPAC received 16% of the equity and the
sponsors 4%, valued at $100 million. The expenses incurred by the sponsors ranged from 2 to 5% of the
SPAC value.

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 SPAC Space 721-456

The most common capital structure of a SPAC was units of $10.00, each consisting of one common
share and a fractional or whole warrant. Each warrant allowed the investor to buy a share at a strike
price somewhat above the launch share price (e.g. $11.50). The units would split into common shares
and warrants soon after the IPO. The warrants were then separately tradable.

When the SPAC announced a target candidate, shareholders could opt to redeem their shares for
their pro-rata amount of the trust, getting back their initial investment plus interest. They could then
retain the warrants, effectively obtaining free call options to buy shares at $11.50.

Because many SPAC shareholders redeemed their shares, or because the target company was
looking to raise more capital than the SPAC had available in trust, SPACs often raised PIPE (Private
Investment in Public Equity) money from institutional investors. This was typically done at a discount
to existing common shares (either direct selling of shares or structured equity instruments).

During the combination (called the “de-SPAC” process), the SPAC issued sufficient shares to the
target company shareholders and transferred the cash to the company in exchange for SPAC
shareholder, PIPE, and sponsor shares in the combined entity. After the combination, the ticker symbol
changed from the SPAC’s name to the target company’s name, and the target company traded like any
other public company.

After acquisition, the combined entity had to file a Super 8-K within four days of the acquisition.
The sponsor’s shares and warrants were typically locked up for a period of one year after the filing.

Some Notable SPACs and Sponsors

Gores Holdings/Gores Metropoulos
After a successful public relations campaign run in 2014 that informed the public that the highly
popular snack cakes known as Twinkies would no longer be made, the Gores Group, a Los Angeles-
based private equity firm, raised $375 million in an IPO of their SPAC called Gores Holdings. 17 In July
2016, Gores Holdings announced that they would bring Hostess Brands – the maker of Twinkies –
public in a deal worth $2.3 billion. 18 The deal included $350 million in PIPE money. 19

Following the combination with Hostess, the Gores Group formed several more SPACs, filing for
the ninth SPAC in February 2021. The Gores Group had participated in two additional SPACs
alongside investor Dean Metropoulos. 20

The performance of the SPACs that had completed deals was mixed. As of March 17, 2021, five of
these SPACs had completed deals (Gores Holdings I-IV and Gores Metropoulos). Four of the five had
underperformed the S&P 500 since deals were announced. Only Luminar Technologies Inc ($LAZR), a
maker of lidar sensors for autonomous vehicles, had beaten the market, returning 139%, compared to
the S&P 500’s 16% return over the same period. 21

Social Capital Hedosophia Holdings

Social Capital was founded by Facebook veteran Chamath Palihapitiya (Chamath) to “advance
humanity by solving the world’s hardest problems.” 22 One of the main players in the SPAC boom,
Chamath partnered with investor Ian Osborne to form Social Capital Hedosophia Holdings, which
aimed to sponsor 26 SPACs from $IPOA to $IPOZ. They called the concept “IPO 2.0.” 23

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 721-456 SPAC Space

By February 2021, Chamath had sponsored six SPACs ($IPOA to $IPOF), raising over $4.3 billion
and earning him the title of “King of SPACs.” 24 Three of them had completed deals. $IPOA brought
Virgin Galactic ($SPCE) public, returning 209% from the announcement through March 17, 2021,
compared to the S&P 500’s 33% return. $IPOB brought Opendoor Technologies ($OPEN) public,
returning 82%, compared to the S&P 500’s 17%. $IPOC brought Clover Health ($CLOV) public,
returning -22%, compared to the S&P 500’s 18%. 25 Most of the price decline of $CLOV was attributed
to an SEC investigation launched in February 2021, following a report by short-seller Hindenburg
Research which accused the company of misleading investors and failing to disclose an active
Department of Justice investigation into the company’s business model. 26

While Chamath’s other SPACs continued to search for deals, it was announced in March 2021 that
Social Capital Hedosophia was eyeing a $1 billion listing in the UK for a company that would fight
climate change. The company would not be structured as a SPAC due to the different regulatory
requirements. 27

Pershing Square Tontine Holdings

In July 2020, Bill Ackman (HBS MBA 1992), founder and CEO of Pershing Square Capital
Management, launched the largest SPAC ever raised. In its IPO, Pershing Square Tontine Holdings
($PSTH) raised $4 billion. Unlike most other SPACs, $PSTH priced at $20.00 per unit and did not make
all of its warrants detachable. Instead, each unit came with one-ninth of a redeemable warrant, and
two-ninths of a “distributable tontine warrant” per unit was set aside. The latter were not detachable,
so redeeming shareholders were not entitled to keep them. Instead, their warrants would be distributed
on a pro-rata basis to shareholders who held through the initial business combination, when a target
was found, hence the name “tontine.” 28

The most important difference between $PSTH and other SPACs was the equity taken by the
sponsor (called the “promote”). Instead of receiving 20% of the SPAC’s shares for a nominal
consideration, Pershing Square’s promote consisted entirely of “sponsor warrants” that were 20% out-
of-the-money and worth roughly 6% of the post-combination entity when fully exercised. Moreover,
Pershing Square agreed not to exercise those warrants until at least three years after combination. 29

As of March 18, 2021, $PSTH was still searching for a target and was trading at $26.23, up 31% from
the IPO. 30

SPACs vs. IPOs

SPACs and traditional IPOs each had their advantages and disadvantages. Proponents argued that
the biggest advantages of SPACs were the more streamlined process for private companies wanting to
go public, the greater ability for private companies to make optimistic, forward-looking statements,
and earlier access to high-potential growth companies for retail and smaller institutional investors. On
the other hand, critics pointed out the misalignment between sponsor and shareholder interests, the
lack of transparency about the target’s financials until after the combination, and the likelihood of
declining deal quality as more money chased fewer high-potential targets.

Advantages
The most important advantage of SPACs over traditional IPOs was the time it took for private
companies to go public. Unlike a traditional IPO, which could take 9 months or longer, private
companies could start trading within just 3 to 4 months of signing a letter of intent (LOI) with an

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 SPAC Space 721-456

existing SPAC. This also reduced the interruption to management. 31 Austin Russell, the CEO of
Luminar ($LAZR), which was taken public by Gores Metropoulos in 2020, touted the benefits of listing
through a SPAC: “You got through the process end to end in, you know, like four months, as opposed
to having to spend huge time and distraction for the better part of a year or two.” 32

Another advantage of SPACs for target companies had to do with the ability to make forward-
looking statements that were protected by the “safe harbor” provision of the Private Securities
Litigation Reform Act. The provision did not apply to traditional IPOs, where companies had to be
more cautious about projections for the future. 33 Proponents of SPACs claimed this was an important
difference that allowed companies that the market might not properly value to highlight their potential.
For instance, electric vehicle maker Arrival, which in March 2021 was in the process of merging into
CIIG Merger ($CIIC), projected that it would go from $0 to $10 billion in annual revenues in less than
three years. By comparison, Alphabet (Google), the fastest company to reach the milestone to date in
March 2021, did it in roughly eight years. 34

Disadvantages
The most common complaint against SPACs was the misalignment between the sponsor’s interest
and that of the shareholders. Because sponsors typically received a 20% stake in the SPAC for only
nominal consideration, critics pointed out that they were incentivized to make a deal regardless of
quality. Even the SEC’s Office of Investor Education and Advocacy was skeptical, issuing a warning to
investors in December 2020:

SPAC sponsors generally purchase equity in the SPAC at more favorable terms than
investors in the IPO or subsequent investors on the open market. As a result, investors
should be aware that although most of the SPAC’s capital has been provided by IPO
investors, the sponsors and potentially other initial investors will benefit more than
investors from the SPAC’s completion of an initial business combination and may have
an incentive to complete a transaction on terms that may be less favorable to you. 35

This translated to vastly different returns for sponsors and shareholders. According to JP Morgan
Asset Management, the median sponsor in SPAC companies brought public or liquidated from January
1, 2019 to January 22, 2021 returned 682%. Meanwhile, the median buy-and-hold investor returned
45%. 36 In absolute terms, these investor returns looked attractive, but they amounted to a -73% return
compared to the IPO Index. 37 This led Michael Cembalest, Chairman for Market and Investment
Strategy at JP Morgan Asset and Wealth Management, to conclude, “There are large wealth transfers
from some SPAC participants to others.” 38

In addition to the “wealth transfer” from SPAC investors to the sponsor, there was also one from
the SPAC investors to SPAC “Arb” (arbitration) investors, who were typically hedge funds. These
“arb” investors almost always redeemed shares – or sold them for profit on the secondary market –
while keeping the warrants. They then either sold the warrants on the secondary market or kept them
as effective call options for the future, both of which were “free-money” trades. Bloomberg columnist
Matt Levine explained that these free-money trades were only possible thanks to buy-and-hold
investors (without which everyone would do the free-money trade, and the warrants would be
worthless). He summed up the dynamic succinctly: “Real-money investors who buy SPACs as a way
to invest in an IPO-to-be-named later are subsidizing hedge funds who buy SPACs for free money.” 39

Indeed, hedge funds almost always opted for the free-money trade. One research paper found that
among 13F filers (large institutional investors) the median divestment rate – meaning the percent of

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 721-456 SPAC Space

shares redeemed or sold from the time immediately preceding the merger announcement to after the
merger was complete – was 98%.40

Some were concerned that the retail/buy-and-hold investor returns would continue to deteriorate
as deal quality went down. 41

Another concern with SPACs had to do with the fact that companies going public through SPACs
were subject to less regulatory scrutiny through the initial business combination. Only after the
combination was complete did targets have to file a Super 8-K, meaning that SPAC shareholders had
to decide whether or not to hold through the merger based on forward looking statements subject to
less oversight.

One notable example of shareholders claiming to be misled had to do with electric-vehicle maker
Nikola Corporation ($NKLA), brought public in June 2020 by the SPAC VectorIQ Holdings. On
September 8, 2020, General Motors ($GM) announced they were taking a $2 billion stake in Nikola and
would produce its hydrogen fuel cell pickup truck by the end of 2022. 42 Two days later, short seller
Hindenburg Research published a scathing report alleging fraud and claiming to have “never seen this
level of deception at a public company.” 43 The report claimed systematic fraud in the company but
homed in specifically on a promotional video showing a Nikola truck appearing to drive under its own
propulsion. In reality, the truck was towed up a hill and rolled down due to gravity. 44 Soon after, GM
walked away from its deal with the company. 45 The scandal prompted several investor lawsuits.46
Meanwhile, Nikola’s stock price tumbled from its high of $93.99 in June 2020 to $15.42 as of March 19,
2021.

Finally, the one obvious disadvantage of using a SPAC to raise capital was that the target firm
eventually had to submit to the scrutiny and regulatory environment imposed on public companies,
including extensive reporting requirements which were both expensive and time-consuming. The
alternative for private companies needing to raise cash was private equity funds. In 2021, there were
many ESG (Environmental, Social, and Corporate Governance) funds looking to invest in the same
sectors as SPACs, providing firms with cost-effective capital.

Drivers of the 2020/2021 SPAC Boom

There were many factors behind the SPAC boom. One of the most important factors was the massive
amounts of liquidity provided by the US Federal Reserve in response to the COVID-19 pandemic. With
depressed bond yields, many investors sought out SPACs as a way to improve returns while keeping
risk low due to the redemption rights inherent in the SPAC structure. Some suggested that an element
of “monkey-see-monkey-do” was also at play – “As more high profile, seasoned investors moved into
the sector, the sight of billionaires raising SPAC money gave the format some charisma that lured
others.” 47 Indeed, it was hard to ignore the fact that an increasing number of high-profile athletes
(Shaquille O’Neal, Serena Williams, Alex Rodriguez, Colin Kaepernick, etc.), singers (Ciara, Jay-Z, etc.),
political figures (Paul Ryan, Wilbur Ross, Larry Kudlow, etc.), and business magnates (Peter Thiel,
Richard Branson, etc.) were launching their own SPACs. 48 Finally, for many venture capital and private
equity investors, the SPAC boom represented a choice exit opportunity. 49

SPACs were seeking targets across all industries, but there was particularly an appetite for electric
vehicle companies, battery manufacturers, healthcare companies, fintech companies, and other
consumer technology companies. On March 24, 2021, 214 of the 430 SPACs searching for a target, 214
of them were searching in the tech space (which included electric vehicle companies and battery

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 SPAC Space 721-456

manufacturers), 68 were searching in healthcare, and 43 were searching in fintech. This accounted for
76% of all searching SPACs. 50

SPACs Going Forward

In March 2021, amid rising interest rates and inflation expectations, investors were rotating from
high-growth tech stocks to cyclical value stocks at a record pace. The rotation away from growth
extended to SPACs, as investors reexamined the risks of a possible SPAC bubble. 51 These risks were
echoed by the Chair of the SEC, who explained, “Lately, we have seen more and more evidence on the
risk side of the equation for SPACs as we see studies showing that their performance for most investors
doesn’t match the hype.”52 Even analysts at JP Morgan pondered whether the SPAC craze was
peaking.53

Meanwhile, others had begun to speak out against the SPAC boom. Berkshire Hathaway vice-
chairman Charlie Munger was particularly bearish on SPACs: “Crazy speculation in enterprises not
even found or picked out yet is a sign of an irritating bubble…The investment banking profession will
sell sh-t as long as sh-t can be sold.”54

Despite concerns about excessive amounts of capital chasing a limited number of quality targets,
highly aggressive valuations and projections, and poor alignment between sponsors and shareholders,
some were still optimistic about the future of SPACs.

The launch of three SPAC exchange traded funds (ETFs) – an index-based ETF; an active SPACs-
only ETF; and an active plus post-merger-companies ETF – was one way investors could gain exposure
to SPACs as an asset class without being forced to make specific, concentrated bets. 55

Then there was the potential for more balanced deal structures that were less tilted in favor of the
sponsor. Bill Ackman’s Pershing Square Tontine Holdings was one such example (i.e. fewer dilutive
warrants, smaller promote, incentives to hold through the merger, etc.). As competition for new capital
and quality targets continued to heat up, it was likely that more SPACs would adopt similar terms.

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 721-456 SPAC Space

Exhibit 1 SPAC IPOs vs Traditional IPOs by Year, 2003-2021

Number of SPAC and Tradi�onal IPOs by Year

350

SPAC IPOs Tra di �ona l IPOs

300

250

200

150

100

50

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: Casewriter, based on data from SPAC Analytics, https://www.spacanalytics.com/, accessed April 2021.

Note: Data for 2021 was through April 16, 2021.

Exhibit 2 IPO Proceeds by Type and Year, 2003-2021

IPO Proceeds by Type and Year ($'M)

$120,000

SPAC IPO Proceeds Tra di �ona l IPO Proceeds

$100,000

$80,000

$60,000

$40,000

$20,000

$0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: Casewriter, based on data from SPAC Analytics, https://www.spacanalytics.com/, accessed April 2021.

Note: Data for 2021 was through April 16, 2021.

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 SPAC Space 721-456

Exhibit 3 SPAC IPO Proceeds Raised by Quarter, Q1 2019 - Q1 2021

Quarter SPAC IPOs Proceeds ($’M) Average Size ($’M)

Q1 2019 13 $2,981.35 $229.33

Q2 2019 13 $3,508.06 $269.89

Q3 2019 13 $3,221.80 $247.83

Q4 2019 17 $3,323.10 $196.65

Q1 2020 13 $3,925.60 $301.97

Q2 2020 23 $7,998.90 $347.78

Q3 2020 83 $33,292.20 $401.11

Q4 2020 129 $38,083.10 $294.87

Q1 2021 298 $96,558.70 $324.02

Source: Casewriter, based on data from SPAC Analytics, https://www.spacanalytics.com/, accessed April 2021.

Note: Data for 2021 was through April 16, 2021.

Exhibit 4 Current SPACs by Size

Size Number of SPACs

$0 > $9,999,999 1
$10,000,000 > $19,999,999 3
$20,000,000 > $99,999,999 32
$100,000,000 > $199,999,999 138
$200,000,000 > $299,999,999 319
$300,000,000 > $399,999,999 175
$400,000,000 > $499,999,999 66
$500,000,000 > $999,999,999 68
$1,000,000,000 > $2,499,999,999 12
$2,500,000,000 + 1

TOTAL 815

Source: Casewriter, based on data from SPAC Track, https://spactrack.net/activespacs/, accessed April 2021.

Note: Data was based on value in Trust as of last filing through March 31, 2021. Data included “active” SPACs (i.e. searching,
LOI, definitive agreement) and pre-IPO SPACs.

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 721-456 -10-

Exhibit 5 Top 20 Completed SPACs by Market Capitalization

SPAC Change from Market

Post-SPAC Post-SPAC SPAC Name IPO SPAC IPO Merger SPAC IPO Capitalizatio
Ticker Name (Ticker) Industry Date Size ($’M) Completed Current Price Price n ($’M)
DKNG DraftKings Diamond Eagle Gambling 5/10/19 $400 4/23/20 $55.71 457.1% $22,156
Acquisition
Corp (DEAC)
UWMC UWM Holdings Gores Holdings Mortgage 1/24/20 $425 1/21/21 $7.23 -27.7% $16,581
IV (GHIV) Finance
CLVT Clarivate Churchill Information 9/6/18 $690 5/13/19 $24.87 148.7% $15,120
Analytics Capital I (CCC) Technology
Services
QS QuantumScape Kensington Auto Parts (EV 6/26/20 $230 11/27/20 $30.95 209.5% $11,587
Acquisition batteries)
Corp (KCAC)
OPEN Opendoor Social Capital Real Estate 4/28/20 $414 12/18/20 $16.44 64.4% $9,490
Technologies Hedosophia Services
Hldgs II (IPOB)
ARVL Arrival CIIG Merger Auto Makers 12/13/19 $259 3/25/21 $13.01 30.1% $7,886
Corp (CIIC) (EVs)

to Mar 2024.
VRT Vertiv Holdings GS Acquisition Electrical 6/8/18 $600 2/10/20 $21.78 117.8% $7,654
HoldingsCorp Equipment &
(GSAH) Parts
WSC WillScot Corp Double Eagle Rental & 9/14/15 $500 11/29/17 $28.30 183.0% $6,482
Acquisition Leasing
Corp (EAGL) Services
CHPT ChargePoint Switchback Specialty 7/25/19 $300 2/26/21 $20.20 102.0% $5,610
Holdings Energy Retail (EV
Acquisition chargers)
Corp (SBE)
LAZR Luminar Gores Auto Parts 2/1/19 $400 12/2/20 $16.43 64.3% $5,581
Technologies Metropoulos, (LIDAR maker)
Inc (GMHI)
SPCE Virgin Galactic Social Capital Aerospace & 9/14/17 $690 10/25/19 $20.98 109.8% $4,971
Holdings Hedosophia Defense
(IPOA)
SKLZ Skills Flying Eagle Electronic 3/6/20 $690 12/16/20 $12.55 25.5% $4,969
Acquisition Gaming &
Corp (FEAC) Multimedia

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 721-456 -11-

SPAC Change from Market

Post-SPAC Post-SPAC SPAC Name IPO SPAC IPO Merger SPAC IPO Capitalizatio
Ticker Name (Ticker) Industry Date Size ($’M) Completed Current Price Price n ($’M)
MP MP Materials Fortress Value Metals & 4/30/20 $345 11/17/20 $27.44 174.4% $4,685
Corp Acquisition Mining
Corp (FVAC)
LPRO Open Lending Nebula Credit 1/9/18 $250 6/10/20 $35.60 256.0% $4,492
Corp Acquisition Services
Corp (NEBU)
MPLN MultiPlan Corp Churchill Healthcare 2/14/20 $1,100 10/8/20 $6.21 -37.9% $4,154
Capital III Corp Plans
(CCXX)
ADV Advantage Conyers Park II Advertising 7/17/19 $403 10/28/20 $12.57 25.7% $4,003
Solutions Inc Acquisition Agencies
Corp (CPAA)
NKLA Nikola Corp VectoIQ Auto Makers 5/15/18 $230 6/3/20 $9.65 -3.5% $3,782
Acquisition (EVs)
Corp (VTIQ)
FSR Fisker Inc Spartan Energy Auto Makers 8/9/18 $552 10/28/20 $12.93 29.3% $3,750
Acquisition (EVs)
Corp (SPAQ)

to Mar 2024.
CLOV Clover Health Social Capital Healthcare 4/22/20 $828 1/7/21 $8.62 -13.8% $3,502
Investments Hedosophia Plans
Hldgs Corp III
(IPOC)
AHCO AdaptHealth DFB Healthcare Medical 2/16/18 $250 11/8/19 $28.27 182.7% $3,248
Acquisitions Devices
(DFBH)

Source: Casewriter, based on data from SPAC Analytics, https://www.spacanalytics.com/, accessed April 2021; Industry designation adapted from Fidelity Investments.

Note: Market capitalization data from April 20, 2021.

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Exhibit 6 Active SPACs by Stage

Stage Number Trust Value Average Size

Definitive Agreement 128 $40,232,864,978 $314,319,258
Letter of Intent (LOI) 2 $117,303,905 $58,651,953
Pre IPO 265 $66,388,000,000 $250,520,755
Searching 420 $136,416,973,198 $324,802,317
Total 815 $243,155,142,081 $298,349,868

Source: Casewriter, based on data from SPAC Analytics, https://www.spacanalytics.com/, accessed April 2021.

Note: Data through March 31, 2021.

Exhibit 7 SPAC Deadlines by Quarter

Quarter Value of SPACs w/ Deadline in Quarter

Q2 2021 $685,613,139
Q3 2021 $220,183,048
Q4 2021 $1,155,956,417
Q1 2022 $1,966,095,124
Q2 2022 $2,978,035,208
Q3 2022 $14,098,507,865
Q4 2022 $22,864,420,746
Q1 2023 $92,448,161,651
Total $136,416,973,198

Source: Casewriter, based on data from SPAC Analytics, https://www.spacanalytics.com/, accessed April 2021.

Note: Data through March 31, 2021.

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Endnotes

1 SPAC Analytics, https://www.spacanalytics.com/?gclid=Cj0KCQjwrsGCBhD1ARIsALILBYrQMP7_

Dw_bypLuxYBuPxYwQAvzhRVMyB-tWb4j4wFlI-peBa758gIaAkJIEALw_wcB, accessed March 2021.
2 SPAC Track data through March 31, 2021, https://spactrack.net/activespacs/, accessed April 2021.

3 SPAC Track data through March 31, 2021, https://spactrack.net/activespacs/, accessed April 2021.

4 SPAC Track data through March 31, 2021, https://spactrack.net/activespacs/, accessed April 2021.

5 Kirsten Korosec, “Lidar startup Luminar to go public via $3.4 billion SPAC merger,” TechCrunch, August 24, 2020,
https://techcrunch.com/2020/08/24/lidar-startup-luminar-to-go-public-via-3-4-billion-spac-merger/, accessed April 2021.
6 Luminar Technologies Inc (LAZR) quote from YCharts, https://ycharts.com/companies/LAZR/market_cap, accessed April
2021.
7 Alexander Osipovich and Dave Michaels, “Investors Flock to SPACs, Where Risks Lurk and Track Records Are Poor,” The
Wall Street Journal, November 13, 2020, https://www.wsj.com/articles/investors-flock-to-spacs-where-risks-lurk-and-track-
records-are-poor-11605263402, accessed March 2021.
8 Ortenca Aliaj, Sujeet Indap, and Miles Kruppa, “Can Spacs shake off their bad reputation?” Financial Times, August 13, 2020,
https://www.ft.com/content/6eb655a2-21f5-4313-b287-964a63dd88b3, accessed March 2021.
9 Michael Hiltzik, “Wall Street’s love affair with ‘blank check’ investments won’t end happily,” Los Angeles Times, March 2,
2021, https://www.latimes.com/business/story/2021-03-02/blank-check-funds-spacs, accessed March 2021.
10 Derek K. Heyman, “From Blank Check to SPAC: The Regulator’s Response to the Market, and the Market’s Response to the
Regulation,” https://core.ac.uk/download/pdf/159610375.pdf, accessed March 2021.
11 Antoine Gara and Eliza Haverstock, “How SPACs Became Wall Street’s Money Tree,” Forbes, November 19, 2020, https://
www.forbes.com/sites/antoinegara/2020/11/19/the-looming-spac-meltdown/?sh=579663d670d7, accessed March 2021.
12 Matthew Goldstein, “Blank-Check Bankers Have a Spotty Past,” The Street, June 6, 2005,
https://www.thestreet.com/markets/blank-check-bankers-have-a-spotty-past-10226524, accessed March 2021.
13 EarlyBirdCapital “About” page, https://www.earlybirdcapital.com/about/principals, accessed March 2021.

14 SPAC Analytics, https://www.spacanalytics.com/?gclid=Cj0KCQjw0caCBhCIAR

IsAGAfuMwzcQx3RJoleHREvYXWF479VdiL5PKbQ1SYzJh9dePw3t8do_n6-v0aArTbEALw_wcB, accessed March 2021.
15 Antoine Gara and Eliza Haverstock, “How SPACs Became Wall Street’s Money Tree,” Forbes, November 19, 2020, https://
www.forbes.com/sites/antoinegara/2020/11/19/the-looming-spac-meltdown/?sh=579663d670d7, accessed March 2021
16 SPAC Analytics, https://www.spacanalytics.com/, accessed March 2021.

17 Drew Harwell, “What it took to save the Twinkie,” The Washington Post, July 5, 2016, https://www.washingtonpost.com/
news/business/wp/2016/07/05/what-it-took-to-save-the-twinkie/, accessed March 2021.
18 Ibid.

19 Gores Holdings, Inc. press release, “Gores Holdings, Inc. Completes Acquisition of Hostess Brands, LLC, Maker of
Twinkies,” Bloomberg, November 4, 2016, https://www.bloomberg.com/press-releases/2016-11-04/gores-holdings-inc-
completes-acquisition-of-hostess-brands-llc-maker-of-twinkies, accessed March 2021.
20 “The Gores Group’s tech SPAC Gores Technology Partneres files for a $240 million IPO,” Renaissance Capital, February 2,
2021, https://www.renaissancecapital.com/IPO-Center/News/75975/The-Gores-Groups-tech-SPAC-Gores-Technology-
Partners-files-for-a-$240-milli, accessed March 2021.
21 Casewriter calculations based on market data from Capital IQ.

22 Social Capital website, https://www.socialcapital.com/, accessed March 2021.

23 Socail Capital Hedosophia Holdings website, https://www.socialcapitalhedosophiaholdings.com/, accessed March 18,

2021; and Chris Katje, “Social Capital CEO Chamath Palihapitiya Plans SPACs from IPOA to IPOZ,” Benzinga, September 14,
2020, https://www.benzinga.com/news/20/09/17492732/social-capital-ceo-chamath-palihapitiya-plans-spacs-from-ipoa-to-

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ipoz?utm_campaign=partner_feed&utm_source=yahooFinance&utm_medium=partner_feed&utm_content=site, accessed
March 18, 2021.
24 Erik Schatzker, “The King of SPACs Wants You to Know He’s the Next Warren Buffett,” Bloomberg, February 12, 2021,
https://www.bloomberg.com/news/articles/2021-02-12/the-king-of-spacs-wants-you-to-know-he-s-the-next-warren-buffett,
accessed March 2021.
25 Casewriter calculations based on market data form Capital IQ.

26 Steve Kovach, “Chamath Palihapitiya-backed Clover Health gets notice of SEC investigation,” CNBC, February 5, 2021,
https://www.cnbc.com/2021/02/05/chamath-palihapitiya-backed-clover-health-gets-notice-of-sec-investigation.html,
accessed March 2021.
27 Threon Mohamed, “’SPAC king’ Chamath Palihapitiya is planning a $1 billion listing of a climate company, according to
reports,” Business Insider, March 13, 2021, https://markets.businessinsider.com/news/stocks/spac-king-chamath-palihapitiya-
plans-1-billion-listing-climate-company-2021-3-1030187177, accessed March 2021.
28 SEC Form S-1: Pershing Square Tontine Holdings, Ltd.; and https://www.cnbc.com/2020/07/22/bill-ackman-and-tontine-
holdings-rewrite-the-terms-for-spacs.html, accessed March 2021.
29 SEC Form S-1: Pershing Square Tontine Holdings, Ltd.; and https://www.cnbc.com/2020/07/22/bill-ackman-and-tontine-
holdings-rewrite-the-terms-for-spacs.html, accessed March 2021.
30 Data from Capital IQ.

31 “SPAC vs Traditional IPO & Reverse Takeover,” Bridge Point Capital, http://18.218.104.51/spac-vs-ipo/, accessed March
2021.
32 Camila Domonoske, “The Spectacular Rise of SPACs: The Backwards IPO That’s Taking Over Wall Street,” NPR, December
29, 2020, https://www.npr.org/2020/12/29/949257672/the-spectacular-rise-of-spacs-the-backwards-ipo-thats-taking-over-
wall-street, accessed March 2021.
33 “SPAC Litigation Likely to Surge in 2021,” McGuire Woods, https://www.mcguirewoods.com/client-
resources/Alerts/2021/2/spac-litigation-likely-to-surge-in-2021, accessed March 2021.
34 Eliot Brown, “Electric-Vehicle Startups Promise Record-Setting Revenue Growth,” The Wall Street Journal, March 15, 2021,
https://www.wsj.com/articles/electric-vehicle-startups-promise-record-setting-revenue-growth-11615800602, accessed March
2021.
35 “What You Need to Know About SPACs,” U.S. Securities and Exchange Commission, Investor Alerts and Bulletins, May 25,
2021, https://www.sec.gov/oiea/investor-alerts-and-bulletins/what-you-need-know-about-spacs-investor-bulletin, accessed
June 2021.
36 Michael Cembalest, “Hydraulic Spacking: The SPAC capital raising boom, and why Biden’s early stage energy policies are
more likely to increase oil imports rather than redcue emissions,” J.P. Morgan, February 8, 2021, https://privatebank.
jpmorgan.com/content/dam/jpm-wm-aem/documents/en/investing/eotm/Hydraulic-Spacking.pdf, accessed March 2021.
37 Ibid.

38 Ibid.

39 Matt Levine, “SPAC Magic Isn’t Free,” Bloomberg, January 8, 2021, https://www.bloomberg.com/opinion/articles/2021-01-
08/spac-magic-isn-t-free, accessed March 2021.
40 Michael Klausner, Michael Ohlrogge, and Emily Ruan, “A Sober Look at SPACs,”Yale Journal on Regulation, Forthcoming,
October 28, 2020, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3720919, accessed March 2021.
41 Ivana Naumovska, “The SPAC Bubble Is About to Burst,” Harvard Business Review, February 18, 2021,
https://hbr.org/2021/02/the-spac-bubble-is-about-to-burst, accessed March 2021.
42 Dawn Kopecki, “Nikola shares pop as much as 53% after General Motors takes 11% stake in electric truck maker,” CNBC,
September 8, 2020, https://www.cnbc.com/2020/09/08/general-motors-takes-11percent-stake-and-2-billion-in-equity-in-
electric-truck-maker-nikola-.html, accessed March 2021.
43 “Nikola: How to Parlay An Ocean of Lies Into a Partnership With the Largest Auto OEM in America,” Hindenburg
Research, September 10, 2020, https://hindenburgresearch.com/nikola/, accessed March 2021.

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44 Michael Wayland, “Nikola rebuts fraud claims but acknowledges that its truck wasn’t driving itself,” CNBC, September 14,
2020, https://www.cnbc.com/2020/09/14/nikola-details-false-and-misleading-information-of-short-sellers-fraud-
claims.html, accessed March 2021.
45 “GM walks away from stake in Nikola, days after electric vehicle maker accused of ‘intricate fraud,’” Chicago Tribune,
November 30, 2020, https://www.chicagotribune.com/business/ct-biz-general-motors-nikola-ev-20201130-
dseabkwvfjfkdgndbdfxxddgwu-story.html, accessed March 2021.
46 Clarissa Hawes, “Investor lawsuits mount against Nikola, founder Trevor Milton,” Freight Waves, September 21, 2020,
https://www.freightwaves.com/news/investor-lawsuits-mount-against-nikola-founder-trevor-milton, accessed March 2021.
47 Crystal Tse and Crystal Kim, “SPACs were hot in 2020 and are hotter now. Here’s why,” Seattle Times, February 6, 2021,
https://www.seattletimes.com/business/what-is-this-thing-called-spac-they-were-hot-in-2020-and-are-hotter-now/, accessed
March 2021.
48 Amrith Ramkumar, “The Celebrities From Serena Williams to A-Rod Fueling the SPAC Boom,” The Wall Street Journal,
March 17, 2021, https://www.wsj.com/articles/the-celebrities-from-serena-williams-to-a-rod-fueling-the-spac-boom-
11615973578, accessed March 2021.
49 Crystal Tse and Crystal Kim, “SPACs were hot in 2020 and are hotter now. Here’s why,” Seattle Times, February 6, 2021,
https://www.seattletimes.com/business/what-is-this-thing-called-spac-they-were-hot-in-2020-and-are-hotter-now/, accessed
March 2021; and “Why are SPACs suddenly gaining so much popularity,” Excelsior Capital, https://www.excelsiorgp.com/
resources/what-is-a-spac-and-why-are-they-suddenly-so-popular/#:~:text=Because%20the%20stock%20exchanges%20make,
exits%20has%20seen%20a%20decline., accessed March 2021.
50 SPAC Track, “SPAC Market Stats,” https://spactrack.net/home/spacstats/, accessed March 2021.

51 Joshua Franklin and Aaron Saldanha, “Wall Street’s SPAC sell-off drags on amid fears of a bubble,” Reuters, March 5, 2021,
https://www.reuters.com/article/us-usa-markets-spac/wall-streets-spac-sell-off-drags-on-amid-fears-of-a-bubble-
idUSKBN2AX1MA, accessed March 2021.
52 Benjamin Bain, “SPAC Investment Returns Don’t Match ‘Hype,’ SEC Chief Says,” Bloomberg, March 11, 2021,
https://www.bloomberg.com/news/articles/2021-03-11/sec-sees-growing-evidence-spac-performance-doesn-t-match-hype,
accessed March 2021.
53 Emily Graffeo, “SPAC activity may be peaking right now and will slow for the rest of 2021, JPMorgan says,” Business Insider,
March 8, 2021, https://markets.businessinsider.com/news/stocks/stock-market-outlook-spac-activity-bull-cycle-mania-
jpmorgan-peak-2021-3-1030160982, accessed March 2021.
54 Emily Graffeo, “Investing legend Charlie Munger blasts SPACs as indication of an ‘irritating buble’ and says the ‘world
would be better off’ without them,” Business Insider, February 24, 2021,
https://markets.businessinsider.com/news/stocks/charlie-munger-spac-bubble-mania-investment-stock-market-buffett-
berkshire-2021-2-1030120141?utm_source=markets&utm_medium=ingest, accessed March 2021.
55 Cinthia Murphy, “Battle of 3 SPAC ETFs,” ETF.com, February 10, 2021, https://www.etf.com/sections/features-and-
news/battle-3-spac-etfs-0?nopaging=1, accessed March 2021.

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