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SPAC Regulation - Past, Present and Future

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Special purpose acquisition companies (SPACs) are companies formed to raise capital in an initial public offering (IPO) with the purpose of using the proceeds to acquire an operating business or assets to be identified after the IPO. Securities offerings and mergers by SPACs have garnered substantial attention in recent years. The attention is justified, with IPOs completed by SPACs increasing from 34 in 2017 to 611 in 2021, outpacing the number of IPOs by operating companies in both 2020 and 2021. Since 2017, the frequency that an operating company went public via a combination with a SPAC (a “De-SPAC transaction” or a “De-SPAC”) as compared to an IPO has steadily increased, from roughly one De-SPAC for every ten traditional IPOs in 2017 to roughly one De-SPAC for every two traditional IPOs in 2021—one-third of the operating companies that went public in the United States in 2021 did so via a De-SPAC.

Table of Contents

  1. Introduction
  2. Historical Development of Regulations Applicable to Shell Companies
  3. SEC and Legislative Statements
  4. Chair Gensler’s Requests for Recommendations
  5. Proposed SPAC Rules, Other Possible Regulatory Action and Possible Legislative Change
  6. Conclusion

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.