With the boom in special purpose acquisition companies, privately held companies are getting the upper hand with sellers, sponsors are giving up equity, and deals are closing at record rates, according to an analysis of 2020 data on SPACs by law firm Freshfields.
Some 240 SPACs went public last year. Freshfields reviewed all 64 SPAC business combinations or purchases of companies by these blank-check companies that closed in 2020.
“The data tells you that there’s a lot of competition among SPACs to buy companies,” said Michael Levitt, a partner who focuses on financing and capital markets at the firm. “There’s something called a SPAC-off, and it’s real. We will prepare a term sheet and send it out to a bunch of SPACs, saying these are the terms we want. As s a company you can really choose what you think is the best deal for you.”