After a comeback 2025, this market expert says that this popular listing technique is here to stay

There's a saying: "If it ain't broke, don't fix it." Against those warnings, dumb and smart money alike embraced a new way of bringing companies onto Wall Street during the pandemic — the special purpose acquisition company, or SPAC, for short.

SPACs had been around for many years, but only in 2020 and 2021 did they really take off. Unlike traditional initial public offerings (IPOs) or direct listings, SPACs offered some benefits for investors and businesses alike. For financiers, it was a novel way to make deals and score a stake in a high-growth business by bringing it to the stock market. For the businesses, it offered a less paperwork-intensive path to public markets.

And for investors? Well, it was a lottery ticket. With the benefit of hindsight, we can now see that not all of those lottery tickets were created equally.

As SPACs forced a repricing of unprofitable small caps, SPAC financing activity collapsed, and companies that listed through the vehicles (through a "de-SPAC") did too. Some survived, but some also shuttered as glaring omissions in due diligence made clear the real incentives of making an alternative to an IPO. What might have started in earnest had become a speculative "get rich quick" scheme popular among celebrity investors and institutional investors.

It seemed that SPACs were tainted permanently. Alas, history rhymes. 2025 saw a resurgence in SPAC activity. The jury's still out on whether this time will see a fairer distribution of benefits among all parties.

Perhaps low-quality dealmakers and companies won't find an audience this time? Maybe SPACs can finally live up to their potential without the noise or speculation seen in the 2021 boom?

TheStreet sat down with Willkie Farr & Gallagher's Eddie Best to drill down on the past, present, and future of SPACs: the fantastical highs of 2021, the 2025 Come-SPAC, and why SPACs will continue to find an audience in 2026.

Note: This interview is edited for readability and includes relevant in-text notes in brackets and italics.

For some background, let's talk about SPACs during the pandemic. What went right, what went wrong, and what lessons can we learn from it?

[Here is] what went right: SPACs provided a faster, more flexible path to go public for a number of quality high‑growth or story‑driven companies at a time when the more traditional IPO route might not have been available. 

[Two things went wrong]: Many companies that were not ready to go public went public. Most companies that went public through a “de-SPAC” traded well below their offer prices and, in many cases, were left without sufficient capital to successfully implement their business plans.

What was the ultimate outcome of the 2020–22 SPAC boom?

What lessons can we learn? While a de-SPAC [context : this is when a company merges with a SPAC and replaces its ticker] can be an attractive alternative for some companies, it is important for the parties to do their due diligence to ensure that the public company has sufficient capital to implement its business plans, and for all the parties to have their financial incentives aligned. A de-SPAC is not a shortcut to the public markets; while the process may be different, the substance should be similar to a traditional IPO. 

The ultimate outcome is that the SPAC bust likely weeded out a lot of participants who should not have been participating in the first place. For those left standing, the process has become more difficult and expensive but can still be a worthwhile alternative to a traditional IPO.

It seemed that many of the big names in the SPAC world checked out as a result of poor results [after the 2021–2022 boom]. I'm wondering if the reason for the collapse in SPAC interest had more to do with policy decisions that weighed on growth names (interest rates), due diligence (the companies were bad), the end of retail speculation (which might be influenced by a multitude of factors), or a confluence of different factors? What do you think?  

The reasons are really a confluence of different factors that impacted each other, including poor returns (which also led to the PIPE market for de-SPACs drying up), unrealistic valuations, immature companies, changing macroeconomic conditions, and regulatory developments.

So, for example, poor returns and unrealistic valuations led to the retreat of PIPE investors, which then led to a lack of cash for the de-SPAC’d companies, which then led to companies not being able to fund their business plan. 

All that said, let's talk about the Come-SPAC of 2025: why did SPACs make a comeback, what kind of sponsors are making headway in this market, and is this time "different?" 

SPACs are still a useful alternative to traditional IPOs for some companies, and the least experienced SPAC sponsors have been weeded out. The current “wave” is led by repeat sponsors pursuing smaller deals with more realistic valuations and stronger alignment. While it is not altogether different in structure, it is meaningfully different in terms of participants, scale, focus, governance, and target choice.

Is the quality of firms entertaining a SPAC offering significantly improving from the '20 to '22 bull run? Are the sponsors really profoundly different? Can you provide any examples?  

The sponsors in 2025 have generally been serial sponsors with good track records or industry specialists with deal experience. Gone, thankfully, are the days of celebrity SPAC sponsors who should stick to endorsing consumer goods.

Based on where we've been in 2025, what do you expect for the SPAC market in 2026? 

The SPAC market in 2026 is likely to remain active but niche (AI, data infrastructure, energy-related, and fintech) with the number of deals well above the 2023–24 trough but nowhere near the 2021 peak. A large backlog of IPO‑ready companies plus competitive pressure on private exits implies it will help drive the SPAC market. Deal volume will, of course, depend on how well de-SPAC’d companies trade.

I reckon that a lot of people see SPAC market activity as directly tied to higher amounts of speculation from retail investors and institutions, probably in part because of what happened during the pandemic. That has soured a lot of investors on investing in SPACs ahead of a merger. Is there anything to that? If there is, would the SPAC market backslide in 2026 if retail sentiment were to sour further? 

I don’t think the current SPAC market is as tied to retail investors as before. Like many other things, success breeds success.

Why might SPACs—if indeed better than IPOs for a number of reasons—be here to stay? What has to improve?

SPACs are still a useful alternative to traditional IPOs for some companies and will be around for a while.