The rise of SPACs.

The standard narrative about the SPAC market oscillates between two frames. One frame treats the 2020 and 2021 cohort as the definitive expression of the asset class and concludes, from its aftermath, that sponsor-led listings are a structurally unsound product. The other frame treats any renewed activity as evidence that the market has returned to that cohort's conditions and will repeat the same outcomes. Neither frame describes what is actually happening.

The market that is rebuilding in 2025 and 2026 is a different product from the one that peaked in early 2021. The differences are structural, not cosmetic. They sit in the governing documents, the sponsor rosters, the investor base, and the regulatory baseline. Any serious assessment of the asset class needs to start from those differences rather than from the headline redemption rates of four years ago.

What the 2021 cohort actually taught the market

The 2021 cohort produced, in a short period, a concentrated body of evidence about how sponsor-led listings perform when structural discipline is relaxed. The signals were consistent across a large enough sample to draw durable conclusions. Sponsor promotes calibrated to hit regardless of post-listing performance produced exactly the asymmetry that critics described. Redemption rates above ninety percent in many transactions left combined companies under-capitalised relative to the forward plans their proxies described. Projections that would not have passed diligence in a traditional IPO passed in a de-SPAC context because the disclosure rules, at the time, permitted them. Governance packages were thin because the market had moved faster than the drafting practice.

Each of those signals was treated, correctly, as a problem to fix. The fixes were not speculative. Sponsor promotes with earn-out mechanics and performance vesting. Redemption-adjusted capitalisation tables reviewed at signing rather than at closing. Disclosure standards that align de-SPAC projections with the standards applied to traditional IPOs. Governance packages drafted before announcement with independent directors named and committee charters in draft. None of those fixes removes the risks of a sponsor-led listing. Each of them shifts the baseline to a level at which the risks are priced and the outcomes are defensible.

The market that rebuilt on those lessons

The market that has been rebuilding since late 2024 has done so with those fixes largely internalised. The sponsors still active in the asset class are, with limited exceptions, the ones who were not central to the 2021 cohort. They operate with smaller franchises, fewer transactions per year, and investment committees that have absorbed the lessons of the previous cycle directly. PIPE investors who returned to the market did so with term sheets that reflect the previous cohort's failures explicitly, and the transactions that close in the current cycle carry concessions that were rare four years ago.

The investor base has narrowed. The retail activity that characterised the 2021 secondary market has receded, and the buyers now setting marginal prices on de-SPAC transactions are long-only institutional investors, event-driven funds with experienced analysts, and strategic counterparties. That base is smaller. It is also considerably more stable, and the price signals it generates are closer to fundamental value than the signals generated by the prior cohort's mix.

Regulatory change did real work

The regulatory environment has changed in ways that matter. The disclosure framework that applies to de-SPAC transactions now tracks the framework applied to traditional initial public offerings much more closely. Projections carry the same liability exposure. Underwriters in the combination process have the same due diligence obligations. Financial statements must be produced under public-company audit standards on a public-company timeline. The framework is not identical across the two listing paths, but the gap is far narrower than it was.

That change has two consequences. First, it has removed the regulatory arbitrage that, in hindsight, encouraged some sponsors and targets to choose the de-SPAC path for the wrong reasons. Second, it has, by tightening the floor, created space for disciplined sponsors to compete on structure and execution rather than on disclosure latitude. A market that competes on structure is a market that produces better outcomes for its end customers, which are the targets and the public shareholders.

Why the asset class exists at all

The asset class exists because there is a class of private companies for which a traditional initial public offering is a poor fit. The characteristics are well-known and have not changed. A growth story that benefits from explanation and negotiated price rather than auction pricing. A capital structure that requires committed primary proceeds at announcement. A shareholder base that would prefer a single counterparty to negotiate with rather than a syndicate. A governance package that needs to be drafted collaboratively with the future sponsor of the public company rather than imposed on the target by market convention.

For a subset of those companies, a sponsor-led listing is the right product. The proportion of the overall listing market that fits the description is small, which is why the asset class is small. The proportion is not zero, which is why the asset class persists through every cycle. Sponsors who understand which companies genuinely fit, and which do not, tend to run durable franchises. Sponsors who take every transaction they can win tend to produce the outcomes that give the asset class its periodic reputational problems.

The shape of the current cycle

The current cycle is unlikely to resemble the peak of the prior cycle, in either transaction count or capital raised. The capital raised in 2025 was a fraction of 2020 and 2021 peaks, and the transaction count is tracking at a similar multiple below. That is not a weakness. It is the consequence of a market operating at a baseline calibrated to the structural lessons of the previous decade.

The transactions closing in this cycle share a set of characteristics that were uncommon four years ago. Sponsor promotes with multi-year earn-outs. PIPE commitments reviewed and priced against stress cases that assume high redemption scenarios. Governance packages that include independent chairs, committee charters, and named directors at announcement. Operational support from sponsors that extends through the first full year of public-company reporting rather than ending at close. Those features collectively produce a listing whose aftermarket behaviour looks much closer to a traditional IPO's than to the 2021 cohort's.

What a serious return looks like

A serious return of the SPAC market does not mean a return to 2021 volumes. It means the re-establishment of a functioning capital-formation channel for the narrow set of companies that fit the product. That re-establishment is underway. It is not guaranteed to persist. It will persist only if the discipline demonstrated in the current cycle survives the first multi-year period in which capital markets generally are receptive to risk. Sponsors who relax the discipline in that period will re-learn the lessons that the previous cohort learned. Sponsors who maintain the discipline will build the franchises that define the asset class for the decade that follows.

The question is not whether the SPAC market has returned. It is what kind of SPAC market has returned, and which sponsors, targets, and investors are building it.

The governing principle

The rise of sponsor-led listings, in its current form, is a quieter phenomenon than the one the headlines describe. It is the rebuilding of a capital-formation channel on terms that reflect a decade's worth of experience, including the parts of that experience that were most uncomfortable. The market will not be large. It will be serious. The difference matters to the companies that belong in it.

Governance before growth. Readiness before capital. Those principles are as applicable to a rising market as to a falling one, and they are the discipline that separates the sponsors who will still be here in the next cycle from the ones who will not.

COMMENTARY · 09 DEC 2025 · 7 MIN READ · A.D.