When it comes to blank check initial public offerings (IPOs), two firms dominate the market: Withum and Marcum. Together, these two firms account for 90.2% of all blank check IPOs from January 1, 2019 to September 30, 2020, with 156 companies raising over $47.7 billion.
Only two Big Four firms audited a blank check company at the time of IPO during this period; KPMG, with three clients, and PwC, with one.
A blank check company has no established business plan or operations, and can serve as a vessel to engage in a merger or acquisition with an unidentified company, entity, or other person.
A SPAC, or special purpose acquisition company, is a type of blank check company that has been receiving particular attention lately. SPACs have the sole purpose of raising capital through the process of an IPO in order to acquire or merge with an existing company.
Audit Analytics reports on auditor market share among all IPOs on a quarterly basis. As explained in our most recent analysis, the IPO market was extremely active in the third quarter of 2020 – with 165 IPOs raising over $61.5 billion. This boom was interestingly driven by blank check IPOs, which comprised 48.5% of the total IPO market during this time.
As shown above, there were 80 blank check IPOs in Q3 2020, alone – nearly double the amount in all of 2019. Even more fascinating, blank check IPOs have raised nearly $40 billion in the first three quarters of 2020, more than three times the amount in all of 2019.
Since January 1, 2019, there have been four blank check companies that have raised over $1 billion. This includes Pershing Square Tontine Holdings, Ltd. [PSTH], the largest ever IPO by a SPAC, with $4 billion raised.
The second highest blank check IPO was Churchill Capital Corp IV [CCIV], a SPAC that raised $1.8 billion. MultiPlan Corp. [MPLN], which raised $1 billion in its February 2020 IPO as Churchill Capital Corp III, recently completed one of the largest SPAC mergers in early October, merging Churchill Capital Corp III with MultiPlan’s parent company Polaris Parent Corp to take the company public.
As mentioned in a previous post, considering the successes of blank check IPOs and SPACs, it is likely that this activity will continue to be seen in the future, provided continued economic stability. Given the staggering IPO activity in Q3 2020, it’s hard to predict what Q4 will bring. However, there are a magnitude of factors that could impact this market, including the U.S. presidential election and the ongoing COVID-19 pandemic.
This analysis uses data from the Initial Public Offerings database, powered by Audit Analytics.
For more information about Audit Analytics or this analysis, please contact us.
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