SPACs: Explosive Growth Raises Bubble Concerns, Widespread Adoption of Investor Safeguards Needed
The special-purpose acquisition company (SPAC) market currently may be experiencing a bubble. The increase in SPACs being created and competing over a limited number of acquisition targets is leading to higher valuations for these target companies, which may not be sustainable. However, when used in moderation, SPACs could improve access to capital for private companies during bouts of market volatility, while adding an element of stability to the revenues of financial institutions.
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