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IPOs and SPACs: Recent Developments

Author

Listed:
  • Rongbing Huang

    (Michael J. Coles College of Business, Kennesaw State University, Kennesaw, Georgia, USA)

  • Jay R. Ritter

    (Warrington College of Business, University of Florida, Gainesville, Florida, USA)

  • Donghang Zhang

    (Darla Moore School of Business, University of South Carolina, Columbia, South Carolina, USA)

Abstract

After two decades of low initial public offering (IPO) activity and a number of regulatory changes, the number of IPOs of both operating companies and special purpose acquisition companies (SPACs) boomed in the United States in 2021 before collapsing in 2022. In recent years, surging valuations have resulted in many private companies achieving “unicorn” status, a valuation of $1 billion or more, partly fueled by investments from mutual funds. Many of the unicorns that have gone public have done so with dual-class share structures. We compare three alternative mechanisms for going public, including traditional IPOs, mergers with SPACs, and direct listings. The most common exit for successful venture capital–backed companies, however, continues to be by merging with a larger company.

Suggested Citation

  • Rongbing Huang & Jay R. Ritter & Donghang Zhang, 2023. "IPOs and SPACs: Recent Developments," Annual Review of Financial Economics, Annual Reviews, vol. 15(1), pages 595-615, November.
    • Handle: RePEc:anr:refeco:v:15:y:2023:p:595-615
    DOI: 10.1146/annurev-financial-111021-100657
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    More about this item

    Keywords

    initial public offering; IPO; special purpose acquisition company; SPAC; unicorn; confidential filing; direct listing; dual-class shares;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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