S1E3: Sarah Zechman - Unpacking SPACs

Professor Sarah Zechman is Chair of the Accounting Division at Leeds, as well as an expert in financial communications and disclosure. She’s been researching SPACs – short for special purpose acquisition companies – and their sudden popularity, especially among celebrities.

This episode digs into what SPACs are, why they’ve been in the news more, and what listeners should consider before going in on SPACs 

EPISODE QUOTES:

Why are SPACs an alternative to IPOs?

[00:05:39] People at this point are looking for alternative investments. I've seen a lot of creative investments out there, and SPACs are one of them that are a bit different. It's difficult to obtain stakes in a traditional IPO. Even those entities that have access are often constrained in their allotment. If you want to invest in early-stage investment, there's very limited options for many entities and individuals. But SPACs expand the pool of investment opportunities available.

A brief history on the popularity of SPACs

[00:21:00] The first SPAC was actually back in the 1990s, but they were extremely infrequent until 2003. And even from 2003 to 2017, there were maybe 20 a year. So still very infrequent. Then, in 2018 and ramping up in 2019 and certainly 2020 they've exploded quite a bit. In 2020, there were 200 SPACs that raised over $70 million. 

SHOW LINKS:

Guest’s Profile:

Profile at Leeds School of Business

Sarah Zechman on LinkedIn

More About this Guest:

Behind the Blank Checks: Leeds Research Takes a Crack at SPACs