SPAC Liquidations Top $12 Billion This Year as Sponsors Grapple with Tough Market, New Buyback Tax

The new 1% buyback tax set to go into effect on December 31, 2022, has encouraged many sponsors to liquidate their SPAC deals before the year-end, presenting yet another set-back for the market. The tax, a provision of the Inflation Reduction Act, could affect SPACs that fail to complete their deals, impacting the cash returned to investors.

Partner Melanie Chen, who has been at the forefront of UHY's SPAC initiative, noted the tax is a factor but not the sole reason for the liquidation. "Market condition is the driving factor, and apart from that, there is the 1% exercise tax. I think it added a little bit chemistry to accelerate the decision making process."

Read the full article published by CNBC.