Also I think at some point we need to reconsider the bail out approach of lending companies because they are too big to fail. Also separating institutions and trimming through their lending money practices makes better sense than bailing them out, because "too big too fail."
When I borrow money I am assigned an interest plus collateral rate based on the inflation/cost of money at the time+projected and my risk of defaulting. On average the "bank" has zero risk (and I have liquidity). If the bank gets greedy and like some institutions that we are all well aware of in the recent years, forgets to do basic risk planning and hedge appropriately flounders that, then if most people default it is their fault -- people paid them for that event. Start bankruptcy proceedings, liquidate/fire the executive team, absorb valuable teams/assets, renegotiate with company's lenders and move on. This happens constantly B2B. Business bankruptcy is different than individual one (at least in the U.S. and some other E.U. countries I am familiar with) -- due to liability plus other measures. Somehow politicians came into the story of systemic risk and allowed certain parts of the economy to become immune to such issues... (Which lead to the Wall Street/Big Bank cockiness.)
Any investors remaining after the deal closes implicitly agreed to the closing price.
I don't think there were any cases of a SPAC not returning deposit money if someone asked, and the institutional investors generally preferred the "guaranteed return" over gambling so the redemption percentage was quite high(I think 50%+).
https://nypost.com/2021/12/02/buzzfeed-investors-pull-funds-...
(Not saying you're implying otherwise here, just building on the fact that a closed SPAC is not more guaranteed to be a stable business any more than a private business).
If I gave you $1 billion and said:
1. buy a company within 2 years and keep 20% of the equity of that company for yourself. You do not need to hold that equity for the long term. You can sell that 20% equity immediately and pocket the proceeds.
2. do not buy a company within 2 years and return the $1 billion to me with interest.
If you had to choose between buying a trashy company and pocketing $200 million or returning me the $1 billion and pocketing nothing, which would you choose?
I'm no SPAC expert. When I first heard about them I wrote them off almost immediately and never had an interest to dig in any further. It seemed like the business equivalent of a subprime mortgage and it was only a matter of time before it caught up with them.
I think I saw in another comment that it may be due to investors looking to get their money out, so maybe there is pressure there. I understand investors not wanting to take 10 years to see returns, but not if it comes at the expense of the business. I don't know all the ethics around startup investing, but if we start seeing a lot of these business go south (significantly more than traditional IPOs), a line may have been crossed. This could be a means to shift what used to be pre-IPO investment risk over to public investors if things start to look shaky internally. Again, I'm not expert, just spitballing.
I see the similarity to sub-prime mortgages, but the differences are: 1) this is the stock market so I don't think anyone doesn't understand the risks, 2) SPACs are no where big enough to drag down the rest of the market.
Before SPACs, companies would do reverse mergers. A basically bankrupt public company "buys" a private company and merges. Swap the private equity for public and now you're a public company with far less hassle than an IPO.
(I have no idea how these space companies are faring now, and what side of the statistic they represent.)
So have governments. The entire US space industry has to be viewed in terms of budget reductions for federal aerospace, in terms of privatization.