August 2026 SPAC Market Update

Joshua Wilson: 0:00

All right, everybody. Good day. Welcome to The SPAC podcast. Uh, Josh here, the co-host, here with Michael Blankenship, the, uh, the host of the show, the brain power behind the show, and we've got some SPAC updates for you. So Michael, what are you seeing in the world of SPACs today?

Michael Blankenship: 0:18

Yeah, look, I think the, the headline number is to date there have been 135 SPAC IPOs, so that's a pretty healthy SPAC market. You know, 2024 going back you had, uh, 57, and then last year you had 144, so we're almost going to eclipse, uh, that in probably in the month of August or, or September. Um, th- that's good and bad, right? These IPOs have raised 26 billion or more, um, with the trust size about 200 million. As we've talked about before, Josh, usually you look at some multiple of that, uh, trust size. You have to at least have 80% of that. But typically because of dilution and everything else, you wanna have a multiple of that, and I think that is, uh, important to know. And one other issue, one other thing to note is that most of them, uh, more than two-thirds, have been US deals, and so they're… we're seeing a lot of activity there. Um, on that back end, there's been over 44 announced and several have, uh, have closed. The, that, uh, we talked about deal value, that deal value has been almost 40 billion on those 44, um, de-SPAC transactions. So we're… You know, you look at each one at probably around a billion or, or more, which, you know, I think we've talked about it before, um, having the SPAC be a particular size is critical to that dilution as we mentioned. I personally think anyone that's on a sub $5 billion worth, um, valuation are gonna be good fits for a SPAC. Okay. Anything bigger gets a lot tougher.

Joshua Wilson: 1:51

Uh, yeah, so why would, why would anybody at that size choose a SPAC? Like, or have you seen any of those pop across and you, you said anything bigger really it might not make sense. So I guess, uh, people who are flirting that line of too big for a SPAC or not big enough for a SPAC, like, what are some of your thoughts there?

Michael Blankenship: 2:11

Yeah, I think the ones that kind of fit nicely into that do have some realistic projections, have, you know, real kind of institutional ownership coming in, um, and, and show that there's real growth. So, you know, this, this particular segment of the SPAC deals, um, we're seeing a lot different than with the kind of companies we saw five years ago, and I think that's changing the market. So if you actually have sort of infrastructure plays, defense, data centers, digital assets, all of those things kind of show real revenue and real growth, and that growth story's important for a SPAC. And so that continues to be one area where I think, um, a SPAC could come in and, and help, especially because a SPAC gives you that price certainty, it can give you the faster execution. Um, you know, there aren't these, quote, quote, "market windows," and so you continue to kind of see, uh, changes there. So it gives that ability to, to raise the PIPE, the ability to be flexible, unlike a traditional IPO where, you know, certain windows go there. But you, you, you peg a price early on, you've got that valuation, I think that's a critical piece.

Joshua Wilson: 3:19

Yeah. Let- well, let's talk PIPEs. What have you seen in, you know, PIPE activity or, you know, the, the raise of that? Ha- have you seen the activity increase or decrease over time? What are you seeing?

Michael Blankenship: 3:32

I, I… We've seen a lot more PIPE activity. I think it depends on your industry, your valuation. The, the key for the PIPE is that if you can get it before you sign, it's helped validates that valuation you're putting on that deal. And so when you come out, it really does help, you know, price it the right way. If it comes after, um, it's more incremental cash to the transaction and the company. But, and so, but we are seeing a lot more PIPE, uh, dollars out there than we saw two years ago.

Joshua Wilson: 4:04

Yeah.

Michael Blankenship: 4:04

There was no PIPE market. It was clogged up for better, you know, for lack of a better word. But it was difficult to get it going, and now we're seeing a lot, lot different. I think that's because you're seeing the higher quality transactions.

Joshua Wilson: 4:17

What, what do you attribute to the higher quality deals? Like, what, what, what is causing that?

Michael Blankenship: 4:24

Yeah, I think instead of having sort of the electric vehicles which hadn't had revenues or some high costs with hockey stick projections, uh, you now have real companies that have shown that they can maintain growth and can go further growth. And if they're in the public market, that public, uh, vehicle will help them grow even faster, having the equity as the currency, having, you know, different institutions come in and, and provide, um, support. The- all of those are very helpful for those kind of companies. And so we're seeing the higher quality companies as the ones going public as opposed to just the, uh, the ones that were, you know, basically an Excel spreadsheet saying they were gonna do something.

Joshua Wilson: 5:05

Yeah. Yeah, absolutely. Now, you've seen a lot, a-and we've had him on the show, serial SPAC sponsors, you know, they, they've come back multiple times and they, they keep getting back into the game. What are you seeing, you know, for… What are you seeing in the difference of new SPAC sponsors, maybe, you know, SPAC number one versus some of our friends who have done nine SPACs, 10 SPACs and, you know, what are, what are you seeing some of the difference in how they structure and set up the SPAC and how they raise capital?

Michael Blankenship: 5:34

Yeah. So when you have a, a, a very, uh, busy IPO market, um, you end up getting terms that are more favorable for investors as you get more and more, uh, IPOs out there. And so the newer ones are probably gonna see the worse terms than the more, uh, eight, nine, 10 down the road because they've executed, people have seen their execution. It's like a private equity world when you have a, a fund one is not gonna perform the same way like a fund five. Yeah. And so you, you've got that kind of thought process around it. So for instance, a fund or, um, a SPAC nine might have, you know, half a warrant and, or a third a warrant a-and $10 per share, whereas a first time might have a right and a warrant, or that warrant may be a half or three-quarter, something that's not as, as beneficial. So more costly, more difficult on the back end to get sort of that cap structure alignment. Um, so it won't be as attractive to a target as m-more maybe the, the SPAC nine.

Joshua Wilson: 6:48

Yeah. Has anything changed in the regulatory landscape for SPACs over the past two, two years? You know, things that you've seen

Michael Blankenship: 6:58

You know, beyond the, um, the new rules that came in in July of 2024, there hasn't been any kind of regulatory specific change. Um, but we have seen, um, a lot more IPOs with no reviews, meaning the SEC's not clearing, like, going through review, and so you can ask for effectiveness. On the back end, we are seeing, you know, fewer comments, and maybe it's less academic than it was before, and so that's very helpful to try to get a deal done faster.

Joshua Wilson: 7:28

Yeah. For SPACs that are, you know, they, they set up and they're looking for targets, you know, you, you mentioned how many were in the US versus international or overseas?

Michael Blankenship: 7:39

Over two-thirds have been US, so.

Joshua Wilson: 7:41

Okay. Do you think that competition for, you know, the, the amount of SPACs versus the targets, do you think that these targets are maybe talking to multiple SPACs or exploring other avenues, uh, maybe even a strategic sale? Like, what are you seeing there, the competition?

Michael Blankenship: 7:59

Yeah, there's certainly competition. You've got 359 SPACs outstanding right now, and so that's a lot of SPACs out there, a lot of paper that it can compete, um, for, for a deal. And to your, to your question, I mean, a target can potentially even dual track it somehow, find a way to sell versus do the SPAC. Now, there's exclusivity typically signed, so it'd make it kind of hard to do a dual track. But, you know, they can look at it early and, you know, be, be prepared if they want to end up doing that.

Joshua Wilson: 8:30

Yeah. So you can see when a SPAC started, and you could see their time horizon. How much time do they have left? And that's like it, it's ticking down, right? So the, the further it gets to the, the close, the less viable, would you say it is to, you know, find the target, close the target? Like, do- should that be something in the target's mind when looking and having conversation with a SPAC?

Michael Blankenship: 8:54

Yeah, it, it definitely gives them more of the bargaining power, um, the closer it is to its life cycle. So there's end of its life, um, liquidation, so it has more… It can negotiate for founder shares, can negotiate various things. So SPACs know that, targets know that, so they can negotiate- Yeah … from a commercial standpoint. Yeah,

Joshua Wilson: 9:15

and these are strategies that, you know, that we've heard other SPAC sponsors come on and talk about, and we've heard targets come and talk about. You know, when it, when it comes to, let's just say we started a SPAC, just the, the market was tough or whatever, you know, two years ago, and, you know, we're running out of time. What, what have you seen strategies-wise for them to, you know, do with a, a SPAC? They've invested all this at-risk capital into this, and they're sitting on something that might go to a value of some… you know, much lower than they put in, right? So, like, what are some strategies you've seen there?

Michael Blankenship: 9:50

Yeah, I mean, if it's coming closer to its end and they've put that money in, there's value. Like, we've seen them sell. You know, they'll sell a piece of it, do something and, and take on some of the liabilities for it. Um, it's usually the biggest option,'cause otherwise they're gonna have to liquidate, which is costly and obviously gave up all that at-risk for nothing.

Joshua Wilson: 10:10

Yeah.

Michael Blankenship: 10:11

The winner, the winners were the, the parties and the bank, right? Not the- Right … founders.

Joshua Wilson: 10:17

So when it comes to… Let, let's go on institutional and the capital raising side. Where, why do you think, you know, you're starting to see more PIPE activity, and you're starting to see more confidence in the, in the marketplace.

Michael Blankenship: 10:31

Mm-hmm.

Joshua Wilson: 10:31

Um, for a, you know, a SPAC sponsor, let's just say they're even, you know, serial SPAC sponsor. Where, how do you think they're starting up those conversations with, you know, these institutions to, to raise this kind of capital?

Michael Blankenship: 10:45

I, I think it's probably easy for some of them'cause they're like, "Hey, look, I did this a couple years ago and made you guys a lot of money. And, you know, why take a look at that and why, you know, invest this again?"

Joshua Wilson: 10:57

Yeah.

Michael Blankenship: 10:58

And so I think that is, like, a critical piece that they really point to. And again, I think I, I put it back in sort of the, in the, uh, way of, um, you know, the private equity world, and I think that is very similar in the way that you kind of think about it, so.

Joshua Wilson: 11:14

Yeah.

Michael Blankenship: 11:14

But,

Joshua Wilson: 11:16

yeah. Got it. So what… Final question, right? You started, you know, the SPAC podcast with me probably a year ago. We've interviewed a lot of people. What was… Like, how many SPACs have you, have you reviewed, looked at, launched over your years of SPAC-ing? You know, give me an idea of how many transactions, dollar value. Just if you, if you had to take, you know, some, uh, bullet points there, what would you say?

Michael Blankenship: 11:42

I would say I've worked on over probably 60 to 75 SPAC transactions. We've closed several this year already. I think over the past year we've probably done over 20 IPOs. Um, and so we stay pretty active in the market. I think in the last six years, you know, it, it would probably more than 75 because- Yeah … we were once helping one of the bulge bracket banks, you know, review, um, de-SPAC transactions, and so we got pretty deep in the weeds on a lot of those deals.

Joshua Wilson: 12:15

Yeah.

Michael Blankenship: 12:16

Um, we've, we've served the role in all of them, whether it be the issuer, underwriter counsel, uh, target counsel, SPAC counsel, placement agent counsel, regular M&A counsel, fairness opinion counsel. We've been… We've done the whole gamut.

Joshua Wilson: 12:32

Yeah. So, uh, what question or what final thing would you like to leave with the audience, uh, you know, our SPAC listeners here? What would you like to leave with them, or what, what final question should I ask you?

Michael Blankenship: 12:45

Look, I think, I… Well, I'll leave them one thought. Like, 2021 style SPAC frenzy was crazy. We all lived it, uh, that were in the market, and we saw it. And so I think we're starting to see, you know, a period of consistent issuance in, in favorable capital markets. Got an SEC that's definitely wants more capital formation. I think you've got, um, sponsors here that are gonna continue to source high quality targets, and I think ones that are looking to, um, be structured properly. And I think the SPAC market evolved from where it was when it first came out to now, and I think we've seen the maturity and getting into a, a more mature cycle where it's definitely a Permanent sort of financial fixture where people can use as an instrument to go public. Uh, until we fix some of the IPO related stuff, or at least get more interest into that, um, SPACs are gonna be the way to go. They're a little bit faster, more deemed valuation, and I think you can find, uh, a lot of activity there.

Joshua Wilson: 13:49

Cool. Well, Mike, uh, grateful for the, the work that you've invested in this community, for the SPAC podcast and, and for what you've built here. Uh, ladies and gentlemen, in the audience, have y- always reach out to Mike or myself, and if you have any questions about SPACs or, or you wanna maybe, uh, present a guest, we work with a lot of IR firms and a lot of investment banks. We're having conversations with, uh, the, the groups that, that launch in these SPACs. So reach out to us and, uh, we'll see you all on the next episode. Cheers guys.