Get access to the Editor’s Digest for free
Roula Khalaf, the Editor of the FT, shares her top story picks in this weekly newsletter.
The Spac market was in decline during the industry’s annual conference in mid-2022, with a last-minute visit by porn star Stormy Daniels failing to uplift spirits.
This year’s gathering at a golf club in a posh New York suburb was much more positive, attracting some of Wall Street’s top investors, representatives from major law firms, and numerous banks, consultants, and private investors.
Special purpose acquisition companies are experiencing renewed interest as traditional IPOs struggle. This resurgence comes four years after low interest rates fueled vast investments into vehicles meant for businesses like flying taxis and commercial space operations.
“Everyone seems more optimistic, with many smiles all around,” noted a lawyer based in the Cayman Islands at the Spac Conference 2025, held this Wednesday at Westchester Country Club in Rye, New York, which saw a record number of attendees according to organizers.
Spacs have been a part of the US stock markets for over 30 years, enabling investors to raise funds through an IPO for a placeholder company that has about two years to find a private firm to merge with or acquire. However, most end up trading significantly lower than their original listing price, often leaving retail traders at a loss.
Initially dismissed as “a poor man’s IPO,” Spacs gained massive popularity during the stock market rally at the beginning of the Covid-19 pandemic, with 600 deals in 2021 bringing in an astonishing $163 billion before interest rate increases dampened the market. This year alone has seen 56 Spac offerings raising over $10 billion, nearly matching the entire total from 2024.
The revival comes amid uncertainty from Donald Trump’s tariff wars, which have negatively impacted traditional IPOs. His potential return to the presidency has sparked speculation that has invigorated markets for riskier investments such as cryptocurrencies.
As I walked through the conference, staying clear of an axe-throwing booth, I spotted familiar faces from the Spac industry, including Mitch Nussbaum from Loeb & Loeb and Joel Rubinstein from White & Case, along with Joaquin Dean from the hip hop label Ruff Ryders.
Some regular Spac sponsors like former Citigroup executive Michael Klein, billionaire Alec Gores, and entrepreneur Betsy Cohen were not present. However, other attendees, previously deterred by the Biden administration’s tougher regulations and lingering concerns about Spacs’ reputation, were making a comeback after years away.
Moving between the Bandshell Terrazzo and the historic Westchester Ballroom, and later enjoying drinks and hand-rolled cigars, representatives from significant Wall Street banks mingled with smaller firms like BTIG, Cohen & Co, and D. Boral Capital, which have been emerging recently.
Conversations revolved around potential deals involving a past frequent sponsor, the advantages of setting up in the Cayman Islands over Delaware, and news that Goldman Sachs might return to the market after a three-year break.
Despite the developments, smaller Spac competitors did not seem anxious. “There’s enough business for everyone,” stated one head of Spac investment banking from a New York firm.
More larger firms are expected to return by the year’s end, unable to continue ignoring the potential fees, particularly as private equity firms begin to auction off portfolio companies, suggested another Spac banker.
Panel discussions emphasized the industry’s strong desire to move past a series of high-profile failures from four years ago. Topics included a “renewed focus on thorough deals and due diligence” and a “shift toward choosing Spac targets in lucrative sectors with solid revenue streams.”
Currently, one particular industry is leading the Spac rebound more than any other, according to the Cayman Islands lawyer. “It’s all about crypto right now,” he stated, referencing several recent Spac transactions concerning companies that mimic the successful strategies of Michael Saylor’s business, the largest corporate bitcoin holder.
“The Spac market is looking promising,” remarked one banker as the conference concluded, overlooking Westchester’s lush 18-hole course.
“In 2021, the market was flooded. Now, there’s not so much availability that we risk falling into the same problems again.”
