Sooner or later SPACs were going to face a painful realignment. Once shining brighter than a white-hot star, these shells or blank-check companies, have rapidly dimmed, losing major wattage. Their basic premise — permitting access to early-stage, private companies, from which retail investors are normally excluded — is admirable and much-needed in a market that all too often favors institutional players.
But over the past two years, SPAC sponsors, target companies, consultants, auditors and lawyers, among others have been drawn into a swirling vortex that, at times, has degenerated into a free-for-all, amplifying echoes and drawing unfavorable comparisons of market exuberance from the South Sea bubble of the 18th century to the dot-com bubble of 2001.
