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The SPAC Era Comes to a Whimpering End

Newly public companies are getting bought out—for far less money—while blank-check promoters prepare for a more skeptical market.

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Illustration: Vincent Killbride for Bloomberg Businessweek

SPACs were one of Wall Street’s hottest trades during the pandemic bull market that finally came to a crashing close in June. Special purpose acquisition companies, also known as blank-check firms, go public without having a business yet. Instead, they’re formed to raise money so that they can buy another, still-private company to be chosen later. SPACs captured the imagination of a lot of ordinary investors who saw them as a way to get in early on promising startups before they went public.

The fad also attracted a range of Wall Street titans, athletes, and celebrities looking to get a piece of the pie by starting their own SPACs. But tumbling stock prices—especially those of more speculative, early-stage companies—have wiped out billions of dollars in value for shareholders who held SPACs after their acquisition deals. Some companies that went public via a merger with a SPAC have fallen so far that they’ve been bought by private companies or competitors at far lower prices. At the same time, a lot of blank-check companies that have yet to do a deal are coming up on big deadlines. If they don’t find a deal soon, they’ll have to return the money they raised to their shareholders.