Blank-check companies have raised more than $70 billion this year; their co-creator once feared the SPAC wouldn’t make it
The flashiest trend in finance traces back three decades to a pair of old law-school buddies. Now, they are finally cashing in.
Investment banker David Nussbaum and lawyer David Miller—known to each other as “Nuss” and “Miller”—invented the special-purpose acquisition company in 1993 to give private firms another way to access everyday investors. SPACs were rarely used and obscure for much of their careers,but are now all the rage—attracting the biggest names in finance,technology and entertainment. Messrs. Nussbaum and Miller have never been busier.
“It’s taken me 27 years to become an overnight sensation,” said Mr. Nussbaum, a 66-year-old from Roslyn, N.Y., on Long Island, who co-founded the SPAC-focused investment bank EarlyBirdCapital Inc.
Also called blank-check companies, SPACs are shell firms that list on a stock exchange with the sole purpose of combining with a private company to take it public. They have become a popular way for startups to access individual investors and a cash cow for the wealthy individuals who create them. SPAC founders now include everyone from hedge-fund manager William Ackman to former baseball player Alex Rodriguez.
SPACs have raised more than $70 billion this year and now account for roughly 70% of all initial public offerings, up from 20% two years ago and a negligible total for much of the past 20 years, according to Dealogic.