WE Senior Investment Manager Discusses the Appeal of SPACs with Family Wealth Report
April 9, 2021
Over the past year, Special Purpose Acquisition Companies, more commonly referred to as SPACs or “blank check” entities, have seemingly taken the reins from traditional IPOs as the new go-to way to take private companies public.
With more than $162 billion raised by more than 600 issuers so far this year according to Bloomberg, many commentators are left wondering why a vast number of ultra-high-net-worth families have been rapidly becoming involved in some of these SPAC deals as both money-raisers and investors. To better understand the appeal of SPACs, Family Wealth Report turned to WE Family Offices Senior Investment Manager Sam Sudame for insight.
According to Sudame, a SPAC’s ability to give venture capital and private equity investors a relatively fast and cost-effective way to exit investments, as opposed to a conventional IPO, helps explains the sudden popularity of SPACs.
“It’s an efficient tool to exit private equity positions,” he explains.
Other potential factors behind the SPAC boom include the new work-from-home lifestyle that contributes to many wealthy professionals playing the markets online and athletes and other high-profile individuals getting in on the action and driving activity.
“It clearly got a lot of attention… although they’ve actually been around a long time,” Sudame tells the publication. “Investors see all this… they see celebrities involved and they want to pile in.”