$300 billion of M&A to be unleashed by blank-check deals

206 companies have gone public through SPACs in 2020

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.

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.”


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.

Billionaire Bill Ackman. (REUTERS/Richard Brian)

The surge in SPACs has been driven by the likes of billionaire Bill Ackman and former Speaker of the House Paul Ryan, to name a few.

Ticker Security Last Change Change %
AZN ASTRAZENECA PLC 54.23 -0.56 -1.02%
ALXN n.a. n.a. n.a. n.a.

A flurry of M&A deals on Monday, led by AstraZeneca’s $39 billion bid for Alexion Pharmaceuticals, has boosted global deals value of global deals above $1 trillion in the final three months of the year. There have now been $2.1 trillion of mergers and acquisitions over the past two quarters, making for the second-strongest second half of the year since recordkeeping began in the 1970s, according to Refinitiv.

Ticker Security Last Change Change %
DKNG DRAFTKINGS, INC. 28.37 -2.93 -9.36%
NKLA NIKOLA CORP. 9.45 -0.43 -4.35%

DraftKings Inc. and Nikola Corp. were among the companies that went public via SPAC this year. The vehicle has become more popular in 2020 as sponsors have shifted their focus from value to growth, according to Goldman.


Sixty-eight percent of SPACs in 2020 were done in the IT, consumer discretionary and healthcare sectors compared to just 24% in energy, financials and industrials making for a sharp turnaround from the 53%-33% split over the past decade that favored value.

The firm also attributes the popularity in using SPACs to go public to the rebirth of the retail investor and the low opportunity cost for investors with near-zero interest rates.

Goldman expects “a high level of SPAC activity” in 2021, but warns the appetite for these type of deals could diminish if the weak-returns that have followed the deals persist.

The post-acquisition median 1-month, 3-month and 6-month excess returns compared to the S&P 500 have been minus 18 percentage points, minus 6 percentage points and minus 16 percentage points.