SPAC (Special Purpose Acquisition Company) is doubtlessly the financial buzzword of 2020. While this particular vehicle for taking a company public has long been part of the financial world, last year saw an absolute explosion in the use of SPACs in place of traditional IPOs.


That explosion has naturally caused a mix of excitement and doomsaying. Parallels to the reverse-merger boom of the early 2000s, the dot-com bubble of that same era, or the mortgage-backed securities crisis of 2008 abound in the latter category.

Looking at 2020 by quarter, we can see that while SPACs were hot going into the year, they reached a boiling point mid-year. By the end of Q2, 2020 had already surpassed 2019 in gross proceeds raised. By the end of Q3, 2020 had surpassed 2019 in total offerings. The year-over-year total shot up by nearly six times from $14B to $97B. 2021 does not yet indicate that this is slowing down. 


Whatever else happens in the marketplace, there are a few key human capital takeaways. It might be expected that the existence of new companies—albeit shell companies—could create a demand for new C-suite positions. Looking specifically at the CFO position, this does not seem to be the case with the SPAC boom. With a few exceptions, most SPAC CFOs are either on loan from the sponsoring firm or from the target company. This is especially true of SPACs created by serial sponsors.


SPACs trail the Fortune 500 in female representation in the CFO role. While both substantially trail census representation in this regard, in a survey of 148 SPACs in the US market, women accounted for only 10.8% of CFOs. The Fortune 500 has 12.5% female representation in the role. This is an area where impactful progress can be made in diversity, equity, and inclusion efforts.

In a recent Harvard Business Review article, Ivana Naumovska sounded a particularly sour note regarding the future of the SPAC marketplace. Regarding the pressures of mandatory refunds, she remarks that “…SPACs must identify firms they can merge with within 24 months after they have raised their funds or they will be wound up and the IPO proceeds returned to investors.” Just how many SPACs are in danger of dissolution and refunds? Naumskova noted that “More than 300 SPACs need to pull that off this year or risk being liquidated…SPACs may well end up in a negative spiral of poor quality/bad press/tighter regulation. And we know how that ended for reverse mergers.”

Given these pressures, it seems clear that a successful SPAC CFO needs to be both a finance and a regulation specialist. The coming attention to potential SPAC failures may make this a difficult role to fill. ZRG has a team of specialists ready to consult with or engage in your next CFO search.