Scores of US-listed special purpose acquisition companies must run through a gauntlet of deadlines and regulatory hurdles this quarter that could set the tone for dealmaking in 2023.

Nearly three dozen SPACs collectively holding more than USD 6bn in their trusts are obligated to complete mergers in October and November, unless shareholders postpone their deadlines at what are often hastily called special meetings. That is the calm before the storm that starts in December when 48 SPACs armed with USD 9.79bn are set to expire, according to Dealogic.

Meanwhile, the Securities and Exchange Commission is yet to finalize rules for the asset class after floating a package of new disclosures and procedures in March. The comment period for the proposed rules ended in August, and dealmakers say they expect a decision soon.

The pressure on blank check companies to complete business combinations ratchets up in the first quarter of 2023. Barring shareholder-approved extensions, 77 SPACs entrusted with USD 19.34bn are scheduled to expire in January; 100 SPACs with USD 30.83bn face February deadlines; and 108 SPACs with USD 31.35bn must wind down by March, according to Dealogic. 

That’s a total of 285 SPACs entrusted with USD 81.5bn that need to complete deals in 1Q23.

The second quarter of 2023 provides some relative relief with 44 SPACs collectively holding USD 10.15bn that are set to dissolve in April; 45 SPACs that raised USD 9.95bn facing deadlines in May; and 49 SPACs with USD 11.36bn in their trusts set to expire in June.

Liquidations of blank check companies have surged in recent weeks. There have been 37 SPACs that have either liquidated or announced their intention to liquidate so far this year, according to Dealogic. Thirteen liquidations are scheduled to occur this month — the highest number on record yet.

The uptick in liquidations is driven, in part, by sponsors that are giving up early and dissolving their cash shells before their merger deadlines are set to expire. Several sponsors acknowledged they are liquidating early to avoid a new 1% tax on stock buybacks that goes into effect in 2023. 

Despite the challenging market conditions, business combinations are still getting done. 

This week, Flexjet, a Richmond Heights, Ohio-based private jet company, agreed to combine with Horizon Acquisition Corporation II [NYSE:HZON]; and XBP Europe, the European business of Exela Technologies [NASDAQ:XELA, XELAP], entered into a merger agreement with CF Acquisition VIII [NASDAQ:CFFE]. Last week, Eco Energy World, a London-based solar photovoltaic company, agreed to combine with ClimateRock [NASDAQ:CLRC].

In other news:

• Apollomics, a late-stage clinical biopharmaceutical firm, is evaluating acquisitions to grow its pipeline following its announcement of a SPAC merger, said CEO Guo-Liang Yu. The Foster City, California-based company is looking for acquisition targets among small molecule drugs and antibodies that would give it entry into new modalities such as MRNA, nucleic acid and cell therapies, he said. Apollomics is receptive to approaches from advisors with targets or from companies looking to sell, said Yu. Apollomics can finance acquisitions from proceeds from its merger with Maxpro Capital Acquisition [NASDAQ:JMAC], slated to close in 1Q23.
• The strong dollar and weakened British pound are creating M&A opportunities for US buyers in the UK, said Aaron Stocks at Travers Smith in London. Private equity firms and corporate buyers are leading the charge, reviewing potential take-privates, he said. US-listed SPACs are looking too, though they are focused on privately held targets since SPACs structurally cannot acquire UK-listed companies.

This is an edition of our 'Spotlight on SPACs' weekly column that tracks the latest news, data, and analysis on special purpose acquisition companies, drawing on proprietary intelligence from Mergermarket and Dealreporter, as well as data from Dealogic.