IPOs and SPACs: Recent Developments

Rongbing Huang, Jay Ritter and Donghang Zhang
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Rongbing Huang: Michael J. Coles College of Business, Kennesaw State University, Kennesaw, Georgia, USA

Annual Review of Financial Economics, 2023, vol. 15, issue 1, 595-615

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.

Keywords: initial public offering; IPO; special purpose acquisition company; SPAC; unicorn; confidential filing; direct listing; dual-class shares (search for similar items in EconPapers)
JEL-codes: G24 G32 G34 G38 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1146/annurev-financial-111021-100657

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