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Nearly two years after special-purpose acquisition companies became cool, a slew of these blank-check companies are approaching their deadlines to find targets and merge.

In 2020, 248 SPACs went public, merging with companies like and While some were hits, many SPACs last year greatly underperformed.

But with a stacked pipeline of SPACs searching for targets and a challenging macroeconomic environment that has largely stalled new public stock offerings, SPACs will have to hustle harder than ever to get deals done. Otherwise, they have to look at their options.

Get the deal done

SPACs that are approaching their deadlines have roughly four options, according to a partner at the law firm .听

The first, and best, option, is to enter into a letter of intent with a target company, essentially getting the ball rolling on a merger. Lehot said he鈥檚 noticed more SPACs hustling toward this goal, and more target companies requiring exclusivity agreements baked into letters of intent. That鈥檚 so that SPACs don鈥檛 turn around and instead pick a different company to merge with (many SPACs are pretty desperate to get to a letter of intent at this point, according to Lehot).听

We鈥檒l likely see SPACs attempt to get deals done as best they can because 鈥渁 deal is better than no deal,鈥� according to JR Lanis, vice chair of securities and corporate finance division.

Those deals may be more aggressive from the buy side, in other words the SPAC side, which could mean overpaying for an asset or 鈥渞eally looking under every stone and finding every possible option,鈥� Lanis said.

鈥楽ix-month safety valve鈥�

The second option is to tap into the 鈥渟ix-month safety valve鈥� that many SPACs have, Lehot said. Many SPACs allow for a six-month extension to the initial deadline鈥搒omething that鈥檚 helpful if, say, there鈥檚 already a letter of intent with a target company and the SPAC just needs a bit more time to close the deal.

If a SPAC doesn鈥檛 have the option for a six-month extension or it鈥檚 already used that deferral up, there鈥檚 also the option of going to stockholders and asking them to amend the SPAC鈥檚 charter, Lehot said. That鈥檚 a pretty big hurdle, though, as it requires the same vote that a merger would need, according to Lehot.

There鈥檚 also the fact that many investors who may have had their money in the SPAC for more than a year at that point wouldn鈥檛 be eager to extend, according to Lanis.

鈥淓specially in an inflationary environment with money becoming more expensive, you don鈥檛 want it just sitting there, you want it deployed,鈥� he said.

Worst-case scenario: Liquidate聽

The worst-case scenario, and last option, is to liquidate the SPAC. In this situation, investors would get their money back, and the SPAC sponsor would lose money鈥攗sually around 2.5 percent to 5 percent of the trust value, according to Richard Humphrey of .听

So far, there鈥檚 only been one SPAC liquidation this year, according to Humphrey, with Burgundy Technology opting to liquidate its trust.

Humphrey expects most SPACs will choose to extend if they can, or ask for that extension, but we鈥檒l likely see more liquidations in the next three to 10 months. Currently, there are at least four SPAC charter extension meetings on the calendar this month, according to SPAC Research.

鈥淚鈥檇 think we鈥檒l definitely start to see more liquidations because there鈥檚 a ton of SPACs out there and they鈥檙e reaching the end of their runway,鈥� Humphrey said.

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