A special purpose acquisition company, or SPAC, is a listed company that owns no business. It raises money from public investors on the promise that its managers will find a private company to merge with, at which point that private company inherits the listing. Nothing is bought at the time of the offering. Investors hand over cash and receive a claim on a trust account, plus the right to take it back if they dislike what is eventually proposed.

Raising first and merging later inverts the usual sequence. Disclosure, pricing and negotiation happen after the money is in, so a private company agrees a valuation with one counterparty rather than discovering it through a bookbuild, and can publish projections a traditional prospectus would not carry. That inversion is the product, and the source of every complaint made against the form.

Advertising technology walked through the door in numbers. Taboola, ironSource, Innovid, AdTheorent and BuzzFeed all went public between June and December 2021 without an initial public offering (IPO). Four of the five no longer trade under their own name.

How the structure works

A sponsor incorporates a shell, usually in Delaware or the Cayman Islands, funding it with at-risk capital for formation and offering costs. The shell sells units to the public, almost always at $10.00. A unit contains one Class A share and a fraction of a warrant, commonly a half or a third, exercisable later at $11.50. Proceeds go into a trust account holding short-dated government securities.

The sponsor takes Class B founder shares for a nominal sum, sized at roughly 20% of the post-offering equity. That block is the promote: worthless if no deal closes, valuable if any deal closes, which is not the same incentive as a good deal closing. Charters typically allow 15 to 24 months to find one, according to Freshfields guidance published in July 2026.

Once a target is found, the parties file a registration statement or proxy and shareholders vote. Every public shareholder separately holds a redemption right: the option to return shares for a pro rata slice of the trust, around $10.00 plus interest, exercisable whether or not the holder votes in favour. Redemption, not approval, decides how much the target actually receives. Sponsors bridge the gap with a private investment in public equity, or PIPE, priced at the trust value.

Taboola shows the mechanism working. ION Acquisition Corp 1 raised $259 million on the New York Stock Exchange in 2020, and the January 25, 2021 merger agreement carried an implied valuation of about $2.6 billion plus $285 million of PIPE commitments. At the vote on June 28, 2021, holders of about 7% of Class A shares redeemed and the transaction delivered approximately $526 million.

BuzzFeed shows it failing. Its counterparty, 890 5th Avenue Partners, had raised $287.5 million. The June 24, 2021 agreement carried an implied valuation of about $1.5 billion plus $150 million of convertible notes. By the vote on December 2, 2021, $16.2 million remained in trust, and the company collected $166.2 million against the $438 million contemplated at announcement.

AdTheorent went further. Twelve days before its vote, the target and its majority owner H.I.G. Capital waived both the $140 million minimum cash condition and the $258.1 million minimum trust condition, an admission that redemptions would gut the account. It closed anyway on December 22, 2021.

Origin and evolution

The form descends from the blank check companies of the 1980s penny stock market, roughly 2,700 of which listed from 1987 to 1990. Congress responded with the Securities Enforcement Remedies and Penny Stock Reform Act of 1990, and the Securities and Exchange Commission (SEC) adopted Rule 419 in 1992, escrowing proceeds, requiring the acquired business to be worth at least 80% of funds raised and setting an eighteen-month limit.

The Commission's own account, in its 2024 adopting release, is that SPACs emerged in the 1990s as an alternative once Rule 419 applied. The workaround was arithmetic: the rule reaches offerings below $5 million, so a larger vehicle sits outside it. David Nussbaum of GKN Securities built exactly that, then adopted escrow, deadline and rescission features voluntarily to make the product saleable. GKN filed to register SPAC as a trademark on November 5, 1992.

The boom arrived three decades later. There were 248 SPAC IPOs raising $83.4 billion in 2020, then 613 raising $162.5 billion in 2021, according to SPAC Research data cited in the European Financial Management journal, or 49% of United States IPO proceeds alongside a record 199 completed mergers. It ended on redemptions, which moved from an average of 11% in the first quarter of 2021 to 85% a year later, according to ICR. Annual SPAC IPOs fell to 31 by 2023.

Regulation followed the collapse rather than preceding it. On January 24, 2024 the SEC adopted Release 33-11265, effective July 1 that year. Rule 145a treats a de-SPAC as a sale of the target's securities to SPAC shareholders, making the target a co-registrant exposed to liability under Sections 11 and 12 of the Securities Act. The rules also stripped SPACs of the safe harbour for forward-looking statements in the Private Securities Litigation Reform Act of 1995 and required disclosure of every material assumption behind a projection.

Why it matters to the advertising industry

The 2021 cohort raised the money that funded a generation of ad tech product roadmaps, and the amounts diverged wildly from the headline valuations. Taboola is the survivor. It reported first-quarter 2026 revenue of $466.4 million, up 9.1%and launched the agentic campaign system Realize+ on April 23, 2026. It has also absorbed the volatility public ownership brings, missing the floor of its own second-quarter 2026 guidance by $15.2 million after a Google spam policy change removed a product worth more than $20 million of expected second-half gross profit.

The others were absorbed. Innovid, valued at about $1.3 billion when it listed according to AdExchanger, was acquired by Mediaocean at $3.15 per share for an enterprise value of roughly $500 million, announced on November 21, 2024 against a market capitalisation of $240 million the previous day. The name now sits on Mediaocean's NIVO artificial intelligence layer.

AdTheorent, valued near $1 billion at its merger, went to Cadent for $324 million on June 21, 2024. ironSource carried a pro forma equity value of $11.1 billion when Thoma Bravo Advantage announced its deal on March 21, 2021, and roughly $660 million of the $2.15 billion in gross proceeds reached the company. Unity took it in an all-stock transaction valued at about $4.4 billion on July 13, 2022. BuzzFeed still trades, and warned in an August 7, 2025 filing that Google's AI search features threaten its referral traffic and advertising revenue.

Limitations and disputes

Dilution is structural. Founder shares take about a fifth of the equity for a nominal payment, warrants add a further overhang, and underwriting fees are calculated on gross offering proceeds regardless of how much cash survives redemption. Stanford law professor Michael Klausner argues from this that de-SPAC shareholders systematically overpay. A July 2024 paper from the Committee on Capital Markets Regulation disputes the net cash per share metric underpinning that conclusion, arguing the dilution is priced in rather than transferred.

Post-merger performance is better documented. Across 905 United States SPAC IPOs between January 2010 and September 2021, Gahng, Ritter and Zhang found investors who bought at the offering and held to merger or liquidation earned annualised returns of 15.9%, while completed mergers averaged minus 8.1% in their first year and warrants returned 68.0%. The split describes who the structure pays.

Governance produced litigation. In January 2022 the Delaware Court of Chancery declined to dismiss claims in the MultiPlan case, applying entire fairness review because a sponsor holding founder shares that expire worthless without a deal has interests opposed to shareholders holding redemption rights.

Not the same as

An IPO prices through a bookbuild run by underwriters, with no shell and no redemption mechanic. Liftoff priced at $23 on June 3, 2026 and raised $437 million, the first ad tech example since MNTN listed in May 2025.

A reverse merger into a dormant shell shares the shape but has no trust, no redemption right and no fresh money. A PIPEis a financing that happens inside a de-SPAC, not an alternative to one. A take-private runs in the opposite direction, removing a listed company from public markets.

Recent developments

The structure has revived without advertising technology. FTI Consulting counted 138 SPACs raising $25.8 billion in 2025 against $8.7 billion in 2024, lifting the format to 40% of United States IPO deal count from 27%, and put SPACs at 69% of deal volume in early 2026. Other tallies place 2025 between 138 and 150 listings. Cayman Finance reported in June 2026 that 103 Cayman-domiciled SPACs had listed in the United States that year, around 61% of all IPOs.

No advertising technology company has taken the route this cycle, and the sector's traffic runs the other way. Nielsen agreed on August 6, 2026 to acquire DoubleVerify for approximately $2.15 billion at $13.60 per share, a 30% premium to a 60-day average. Publicis Groupe agreed to buy LiveRamp at $38.50 per share for $2.5 billion of equity value, which shareholders approved on August 17, 2026. Integral Ad Science had already left for Novacap at $1.9 billion. Vista Equity Partners and Quinti Capital then offered a premium above 50% for Criteo, sending its shares up 21.4% to $23.17 on July 6, 2026. The cohort that used a shell to reach the public markets in 2021 is now largely owned by buyers who did not need one.

Timeline

  • October 15, 1990: Securities Enforcement Remedies and Penny Stock Reform Act signed into law
  • 1992: SEC adopts Rule 419, imposing escrow, reconfirmation and an eighteen-month deadline on blank check offerings
  • November 5, 1992: GKN Securities files to register SPAC as a trademark
  • 2020: 248 SPAC IPOs raise $83.4 billion in the United States
  • March 21, 2021: ironSource announces a merger with Thoma Bravo Advantage at an $11.1 billion pro forma equity value
  • June 28, 2021: ION Acquisition Corp 1 shareholders approve the Taboola merger; ironSource closes its own combination the same day
  • November 29, 2021: ION Acquisition Corp 2 shareholders approve the Innovid merger, with 19,585,174 shares redeemed
  • December 3, 2021: BuzzFeed closes its merger with $16.2 million left in trust
  • December 22, 2021: AdTheorent completes its combination with MCAP Acquisition Corporation
  • Full year 2021: 613 SPAC IPOs raise $162.5 billion, 49% of United States IPO proceeds
  • January 3, 2022: Delaware Court of Chancery applies entire fairness review in the MultiPlan case
  • Q1 2022: average redemption rates reach 85%, up from 11% a year earlier
  • November 7, 2022: Unity completes its merger with ironSource
  • 2023: annual SPAC IPOs fall to 31
  • January 24, 2024: SEC adopts Release 33-11265, removing the projections safe harbour
  • June 21, 2024: Cadent completes its $324 million acquisition of AdTheorent
  • July 1, 2024: the SPAC rules take effect
  • February 2025: Mediaocean completes its acquisition of Innovid
  • Full year 2025: SPACs account for around 40% of United States IPO deal count
  • Q1 2026: SPACs reach 69% of United States IPO deal volume

Summary

Who. Sponsors form and manage the vehicle, taking founder shares for a nominal price. Public investors supply the trust. Private companies supply the operating business. Underwriters, PIPE investors and the SEC set the terms around them. In advertising, the sponsors included Thoma Bravo, Monroe Capital and ION Asset Management, and the targets included Taboola, ironSource, Innovid, AdTheorent and BuzzFeed.

What. A listed shell with no operations that raises cash into a trust, then merges with a private company, transferring the listing to that company in a transaction known as a de-SPAC.

When. The form dates to the early 1990s, following Rule 419. It peaked in 2021 with 613 offerings raising $162.5 billion, collapsed under redemption pressure through 2022 and 2023, and has revived from 2025 onward without the advertising sector taking part.

Where. Primarily the New York Stock Exchange and Nasdaq, with the shells increasingly incorporated in the Cayman Islands rather than Delaware.

Why. It offers a negotiated valuation, a compressed timetable and the ability to publish forward projections, at the cost of dilution and cash uncertainty. For advertising technology, the results ranged from a company that raised $526 million and remains listed to one that raised $166.2 million against $438 million expected, with most of the cohort sold within three years.