According to Jefferies “SPACs are very compelling for industry executives, as the economics are as or more attractive than traditional private equity fund economics.  SPAC sponsors typically receive 20% of the common equity in the SPAC for an investment of approximately 3% to 4% of the IPO proceeds.  For example, in a $250 million SPAC, the sponsor typically receives approximately $60 million of common stock for a $7 million investment in warrants.

These executives typically have public company experience or have sold their prior business and are seeking new opportunities.  Often they have significant M&A experience and a proven ability to source transactions.   In addition, of the 42 SPAC IPOs in 2019 sponsored by industry executives, approximately 75% of these SPACs have been focused on a specific sector, highlighting again the experience of the management team.”

However only the Master SPAC returns the capital of the Sponsor upon acquisition through IPO time.