SPACs will drive $300 billion in M&A activity over the next 2 years after a monstrous 2020, Goldman says

SPACs will drive $300 billion in M&A activity over the next 2 years after a monstrous 2020, Goldman says

Reuters / Brendan McDermid

Blank-check companies looking for their next target could drive $300 billion in mergers and acquisitions over the next two years, according to Goldman Sachs.A hunt for yield, the shift in focus from value to growth stocks, and retail investors looking for early-stage businesses has driven investor interest in SPACs in 2020, strategists said."If this year's 5x ratio of SPAC equity capital to target M&A enterprise value persists, the aggregate enterprise value of these future takeover targets would be $300 billion," they noted.The strategists warned that weak returns represent one headwind to future SPAC issuance.Visit Business Insider's homepage for more stories.

Blank-check companies looking to merge with or acquire another company could drive $300 billion in M&A activity over the next two years, Goldman Sachs said on Monday.

About 205 special purpose acquisition companies have raised a record $70 billion in IPO proceeds year-to-date, representing a five-fold increase from 2019, strategists led by David Kostin wrote. SPAC IPOs this year account for 52% of the $124 billion raised via 356 US IPOs.

Three major factors drove investor interest in 2020, or what they called "the year of the SPAC." These include a shift in focus from value stocks to growth