SPAC Market 2025: Thoughts from the Street with Ed Kovary

Watch our full conversation below or read this blog post for a summary of the key points.

Key Takeaways:

• Quality and valuation discipline are winning again. Better disclosure, experienced sponsors, and sober pricing and valuations are producing higher trust retention and renewed PIPE appetite.
• Cost to market has normalized and options have broadened. D&O rates are much lower than in previous years and at-risk capital can be self-funded or syndicated, reducing required at-risk capital raise and allowing sponsors to choose between economics and capital efficiency.
• Backlog and timing certainty favor SPACs. With a multi-year queue of IPO-ready businesses, SPACs remain a credible path for teams that need certainty and cannot wait for the traditional IPO queue to clear out.

How Will the SEC Shutdown Affect SPAC IPOs and De-SPACs?

Yelena Dunaevsky: We’re recording on the first day of a government shutdown. How does that affect the near-term pipeline for SPACs and traditional IPOs?

Ed Kovary: In the short run, it’s all about timing. Issuers who were declared effective before the shutdown can still launch and price. Those who were a few weeks away must wait until the Securities and Exchange Commission (SEC) is back to clear comments and go effective. If a shutdown were unusually prolonged, SPACs retain a unique feature—under certain circumstances, they can go effective automatically—but practically, most teams will use the downtime to finalize filings, align their advisers, and be truly ready the moment the SEC reopens. It can slow issuance if it lasts, and calendar congestion becomes a risk as we approach year-end.

Navigating the New Phase of the SPAC Market

Yelena Dunaevsky: Stepping back, we’re in a new phase of the market right now, which is quite different from the euphoric cycle from a few years ago. There are more repeat sponsors and increased emphasis on transparency, governance, and additional disclosure. What are you telling your clients about operating in this new wave of the market?

Ed Kovary: The SEC’s push for clearer disclosure is a net positive—it strengthens the SPAC vehicle as a tool. Experience also matters. We’re seeing repeat sponsors because those who’ve run a vehicle understand the friction points and how to manage dilution within a thoughtful structure. Nothing replaces having run a vehicle and the process before, including the hurdles you encounter in looking to transact and take an operating business public through the vehicle.

It is a diluted vehicle, but it's there to serve a purpose, and the dilution and some of the negative dynamics of the vehicle can be navigated with the right professionals, the right mindsets, creativity, and structuring.

Encouragingly, since mid-year, we’re also seeing first-time issuers return, largely because there's been a handful of successful de-SPAC businesses that have announced, common has traded above the cash and trust level, and we've seen several transactions retain full proceeds from their SPACs. We've seen high retention rates—75%, 60%. Now, there was one that had very limited, almost no retention, but they were able to secure the financing needed for that business through a PIPE.

Capital is available. Institutional investors are supporting the businesses that are coming out. I think one of the things institutional investors recognize is that because there is such a massive queue of companies waiting to come out the traditional IPO route, there are going to be some very good businesses that need certainty on timing to come out, and they will opt to do so via a SPAC.

Yelena Dunaevsky: Costs were punishing in 2021–2022. At-risk capital buckets were large, insurance costs were through the roof, but now we are seeing D&O pricing normalize and sponsors becoming more creative about structuring their at-risk capital. What is the landscape you are seeing now?

Ed Kovary: It’s never been cheaper—on a relative basis—to bring a SPAC to market. There are two workable paths for at-risk capital. Some sponsors self-fund and keep the full promote if they close; others have the bank syndicate the risk capital across family offices and institutional pools that like the return profile. Think of it as a three-year venture capital portfolio: you strive for a couple of home runs, a handful of singles, and accept a few zeros—the blended target is a venture-like return. Sponsors who self-fund want to preserve economics; sponsors who syndicate value capital efficiency and speed. Both paths are active again, and the cost curve is far more rational than it was.

Is There Capital for De-SPACs?

Yelena Dunaevsky: If we look 12–18 months out, today’s SPAC IPOs will be tomorrow’s de-SPACs. Is there enough capital on the other side?

Ed Kovary: We're starting to see institutional investors put equity capital to work in de-SPACs, typically in the form of buying existing SPAC shares that are freely tradable, publicly traded, and hence taking the common share above the cash and trust. As we know, when the common is trading above cash and trust, that's typically a bar indicating that you've got the institutional support to retain your trust. If it's trading at trust or below, then you're subject to what could be very significant redemptions.

But we're also seeing PIPEs starting to be done. The bar for raising PIPE capital is still very high. It is always up to the quality of the business, the management, and the valuation. But investors are going over the wall, taking meetings, evaluating businesses, and making investment decisions, and that's a positive. That's only going to further open up as we see more companies come to market through the traditional route. As there's performance in the secondary market for new issues, that is going to open up more pockets of capital. So the outlook over the next year, year and a half, is quite positive for the product.

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