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PitchBook Analyst Note: The 2020 SPAC Frenzy

Q3 2020

PitchBook Analyst Note: The 2020 SPAC Frenzy

August 31, 2020

In 2020, special purpose acquisition companies (SPACs) have quickly become the hottest new innovation in the search to improve upon the traditional IPO. While these structures provide private companies an accelerated path to the public markets, more certainty around the process and a handful of other benefits, we don't believe SPACs will serve as a cure-all for every public listing. The costs to the company seem to be improving, and the quality of investors forming SPACs has also done a lot to increase the option's legitimacy, although it could put pressure on performance down the line. For now, a select niche of capital-intensive businesses or those with a long-term or complicated story will be the main beneficiaries of this year's SPAC boom.