Home » Markets » $300 billion of M&A to be unleashed by blank-check deals
$300 billion of M&A to be unleashed by blank-check deals
How will a coronavirus vaccine, stimulus impact stocks?
Fox News contributor John Layfield and Kaltbaum Capital Management owner Gary Kaltbaum argue if stimulus continues and a COVID-19 vaccine is distributed in the very near future, markets will experience a stunning rally in 2021.
The mergers and acquisitions boom underway will continue over the next few years as special purpose acquisition companies (SPACs) look to put to work $61 billion of unspent proceeds from their initial public offerings, according to Goldman Sachs.
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Two hundred six companies have gone public through SPACs in 2020, raising a record $70 billion. Proceeds from SPACs have accounted for 52% of the record $124 billion raised by all U.S. initial public offerings.
“SPACs will need to acquire a target in 2021 or 2022,” wrote David Kostin, chief U.S. equity strategist at Goldman Sachs. “If this year’s 5x ratio of SPAC equity capital to target M&A enterprise value persists, the aggregate enterprise value of these future takeover targets would be $300 billion.”
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A SPAC is a “blank check” company formed with the intention of acquiring or merging with another company. SPACs must complete the acquisition within two years or the capital raised needs to be returned to investors.