fall, result from the unique incentives given to SPAC creators, also known as sponsors. They are allowed to buy 20% of the company at a deep discount, a stake that is then transferred into the firm the SPAC takes public. Those extremely cheap shares let the creators make, on average, several times their initial investment. They also let the SPAC backers make money even if the company they take public struggles and later investors lose money, a source of criticism for the process.
“It’s so asinine that you can get this kind of payday for doing something so value destructive,” said Carson Block, CEO of Muddy Waters. Muddy Waters has closed out its short position in MultiPlan shares but is still betting that the company’s bonds will fall. Mr. Block’s firm is alsoThe spokesman for the SPAC team declined to comment on the Muddy Waters allegations.
, topping 2020’s all-time high and incentivizing prolific blank-check firm creators like Mr. Klein’s team to do more SPAC deals. The SPAC team’s spokesman said that all of the investments not tied to price conditions were given to advisers and financial partners including Oak Hill Advisors LP. Mr. Klein’s company is among the biggest beneficiaries of the boom in SPACs, recently reaching the second-biggest SPAC deal ever to take electric-car company Lucid Motors public. That deal
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