Private-equity firm RedBird Capital Partners this week announced that it is joining A’s Exec VP/Baseball Operations Billy Beane to launch the first-ever special purpose acquisition company dedicated to sports (Mult.). In a special to the N.Y. TIMES' Dealbook Newsletter, Cal professor Steven Davidoff Solomon noted SPACs are "having a moment," as they have "raised around $19 billion so far this year, already more than in any full year in the past." Davidoff Solomon explained the three reasons why "SPACs are back" as follows:
- First, they come with a "money-back guarantee." They "typically have two years to make an acquisition or liquidate," and if a SPAC's shareholders "agree to buy a company, they have the right to redeem their shares at the IPO price plus interest, and get out before the vehicle merges with its takeover target."
- Second, despite some "iffy returns, SPACs help smaller and riskier -- but potentially rewarding -- companies go public."
- The final reason is because "market speculation is rife these days, and SPACs are the epitome of a risky gamble" (N.Y. TIMES, 7/29).
