The IPO SPAC-Tacle

February 2, 2021

AI Summary

5 min read

In January 2021, the first three weeks alone saw roughly 60 U.S. special purpose acquisition companies come to market—more SPAC IPOs than in any previous week in history. This explosion came after a year in which global IPO issuance topped $300 billion, with U.S. issuance hitting a record $170 billion. The surge was especially striking because only a couple of years earlier, the number of U.S. publicly traded companies had been near a two-decade low, and the conventional wisdom held that companies were staying private longer. Something had clearly shifted, and this episode of Top of Mind at Goldman Sachs investigates whether the IPO boom—and the SPAC frenzy within it—is sustainable or a bubble waiting to pop.

The IPO Boom in Context

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What you'll learn

1 (00:52) **IPO Market Context and the 2020 Surge** - Alison Nathan sets up the episode by describing the dramatic shift in the IPO market during 2020, from a pandemic-induced shutdown to a record-breaking $300 billion in global issuance.
2 (03:00) **Comparing the 2020 IPO Boom to Past Cycles** - Professor Jay Ritter explains that the 2020 boom looks different depending on whether you count SPACs or just operating companies.
3 (05:16) **The Unique Drivers of the Current IPO Boom** - David Ludwig, Goldman Sachs’s head of global equity capital markets, explains what makes this cycle different from past ones.
4 (06:59) **Broadening Investor Base for IPOs** - Ludwig highlights that the pool of investors for IPOs has expanded significantly.
5 (08:08) **Is the IPO Market in a Bubble?** - Neither Ritter nor Ludwig is particularly worried about a bubble, citing solid fundamentals and reasons for optimism.
6 (11:40) **What Could End the IPO Boom?** - Both experts identify specific risks that could derail the strong 2021 outlook.
7 (13:17) **Is the SPAC Market in a Bubble?** - The episode pivots to focus specifically on SPACs, questioning whether their popularity has gone too far.

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Guests on this episode

Jay Ritter

Show Notes

With the strength of the IPO market and the surge in IPOs via SPACs continuing into 2021, host Allison Nathan, creator and editor of the firm’s Top of Mind report, asks experts whether or not these trends are sustainable. She speaks with Goldman Sachs’ head of Global Equity Capital Markets, David Ludwig, Professor of Finance at the University of Florida, Jay Ritter, and Professor of Business and Law at Stanford Law School, Michael Klausner.

A note to subscribers of the Top of Mind at Goldman Sachs podcast: going forward, we will be publishing future episodes as Exchanges at Goldman Sachs so please be sure to subscribe to that feed.