2021 may be known as the year of peak SPAC, given the explosion in Special Purpose Acquisition Company (SPAC) initial public offering (IPO) transactions. SPAC transactions have implications for D&O liabilities as well as the insurance to pay those liabilities. Because SPACs present novel issues, we expect both plaintiff’s lawyers and insurance companies to take some creative positions not always helpful to D&O policyholders.

The rate of increase in the number of these still-novel transactions has been astounding. The first SPAC transaction occurred in 2009, and only one was recorded in that year. In 2016, 13 transactions with total proceeds of $3.9 billion took place. 2020 had 248 transactions with total proceeds of $83.3 billion. So far in 2021, 308 SPAC IPO transactions have taken place with total gross proceeds of over $100 billion and an average IPO size of $325.8 million. The total count of SPAC transactions stands at 782—39% of them occurring in the first four months of this year.