Factors that Impact the Initial Public Offering Market of the Special Purpose Acquisition Company

Abstract

Due to the dissemination of the coronavirus, the implementation of the segregation policy is not conducive to the operation of the traditional IPOs. Starting from the end of 2019, a technic named “special purpose acquisition company” (SPAC) become popular in the investment market. This paper will mainly focus on testing the factors including the overall market, regulation, and the epidemic situation impact on the performance of the SPAC IPO market. The test will consist of two parts. In the first part, I need to collect the number of SPAC IPOs in the U.S. market, the federal fund rate & 10-year treasury rate, and the number of new infections in the U.S. Then analyze the relationship between the SPAC IPOs and these factors. In the second part, I will test whether the valuation model “EV/EBITDA” could serve as a reliable technic in evaluating the SPAC target company, and the comparison between valuation of the SPAC target company with the overall industries.