Wall Street's brief and heated love affair with SPACs (Special Purpose Acquisition Companies) continues to cool off.
The list of SPACs and technology companies that announced but then abandoned M&A plans involves such sectors as 3D printing, telecom services, robotics and e-commerce platforms. Take a closer look and $16 billion work of SPAC deals were cancelled from January through May 2022. The cancellations offer a cautionary reality check for MSPs and IT service providers that were exploring potential SPAC engagements.
Cancelled M&A: Technology Mergers That Weren't
Examples of cancelled M&A SPAC deals include these abandoned hookups:
The cancelation trend emerged in 2021. Indeed, 17 SPAC mergers, valued at a combined $37.2 billion, were terminated during the final six months of 2021, compared to four worth $720 million during the six months prior, according to data provided to Forbes by financial data firm Dealogic. Just seven SPAC deals were terminated in 2020, that Forbes/Dealogic report stated.
What Is A SPAC?
The SPAC trend was red-hot in early 2021. A SPAC or “blank check” company is designed to raise funds in an initial public offering (IPO) with the aim of acquiring a private business. That private company then becomes public as result of the merger, Reuters notes.
The SPAC trend helped to fuel $63 billion of IPO fundraising worldwide in January 2021, more than five times the proceeds from the same period a year earlier, Bloomberg reports.
However, the SPAC boom led to excess IPO supply that dragged down financial markets in early 2022, CNBC’s Jim Cramer said on January 25, 2022.
