While most would arguably agree that 2020 was a dismal year by many measures, it was a banner one on Wall Street for a once little-known financial vehicle: special-purpose acquisition companies, or SPACs. Once considered a shady back-door M&A tactic, SPACs’ popularity skyrocketed last year thanks to high liquidity levels and market demand for new growth companies.

“With a SPAC, investors are essentially betting on management to acquire a company that they’ll then bring public, not on an actual company itself,” says Alex Korda, global deals analyst at The Edge Consulting Group, an analyst team that covers special situations and other investment scenarios. So far, the overall financial performance of SPACs leaves much to be desired. According to a study The Edge Group released of 115 SPACs that acquired or merged with other companies from 2016 to the end of 2020, 71% of them lost money a year after their completion date.

Obvious risks and potential pitfalls aside, do SPACs hold potential for the design world?

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