April 2024 SPAC Market Update and Outlook


ICR’s April SPAC Market Update & Outlook indicates that the shake-out from over-issuance in early 2021 appears to be winding down, and corporate divestitures are providing a consistent source of sizeable, high-quality SPAC targets.

The SPAC IPO market seems to have normalized, with six SPAC IPOs pricing during the first quarter, of which over 30% were from serial sponsors that returned to the market. These serial sponsors elected to raise larger trusts, increasing average SPAC IPO size for Q1 to $114 million, up 2% from Q4 2023 and 39% from the same quarter last year. In the first quarter there were 29 completed SPAC deals, a similar amount to the previous quarter and above the quarterly average for the last two years. Notably, 15 liquidations occurred, a decrease of 63% from the previous quarter and down from the average of 49 per quarter in 2023.

“We believe the market has now self-corrected as SPAC IPOs have normalized, SPAC liquidations have taken excess capital out of the market and more sponsor teams are working creatively to try to get deals done,” said Don Duffy, President of ICR. “Fairness opinions have also become more prominent, included in over 60% of the deals that closed so far in 2024, providing increased diligence for public investors.”

During the first quarter of 2024, three SPAC transactions were announced for targets with enterprise values over $1 billion. The largest of the transactions was for a digital investment platform, Webull, which announced a $7.3 billion merger. Overall, SPAC transactions tend to fall into two categories – larger companies that partner with experienced sponsors to access substantial capital, or smaller companies that value the path to a public listing more than significant new capital. Corporate divestitures have also been a consistent source of such sizeable, high-quality targets.

“A large company with an established shareholder base can unlock value through a SPAC process,” said Niren Nazareth, Managing Director at ICR Capital. “A partnership with the right sponsor brings new capital, talent and shareholders that can remove existing constraints in the previously combined corporate structure. These advantages, plus the continued support of the previous parent company, are likely drivers of the better post-merger stock performance of spin-offs and carveouts.”

Notable corporate divestitures in 2024 include Honeycomb Battery, Lotus Technology, Sable Offshore and Critical Metals. Overall, spin-offs and carveouts accounted for a disproportionate amount of deal value since January 2023, and have outperformed other post-merger SPAC stocks since deal close.

ICR is the largest communications consultant and advisor to SPACs, having worked on over 170 transactions since 2021. To obtain a copy of ICR’s April SPAC Market Update & Outlook report, please click here.