Foley Partner Louis Lehot co-authored an article for the CFA Institute titled, "Spotlight on SPACs: More Risk Than Opportunity?"
While special-purpose acquisition companies (SPACs) have been around for decades, they have attracted unprecedented interest and investment since the first wave of the COVID-19 pandemic. Amid this recent boom, the entrepreneur Richard Branson, retired baseball star Alex Rodriguez, and other celebrities have all sponsored their own SPACs.
But all this hype has come with considerable controversy as well as added regulatory scrutiny. And for good reason. SPAC-related excesses have been well documented and have raised questions about the underlying suitability of these investment vehicles. The SEC's admonition, quoted above, indicates the credulity with which some approached the recent SPAC bubble.
So, what is a SPAC? How does it work? Who are the players? What are the risks and opportunities? And is the recent SPAC surge a one-time flash in the pan or something more enduring?
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