Document Type
Article
Publication
The University of Chicago Business Law Review
Year
2026
Citation Information
Andrew A. Schwartz, The SPAC Clock, 5 U. Chi. Bus. L. Rev. 385 (2026), available at https://scholar.law.colorado.edu/faculty-articles/2110.
Abstract
Special purpose acquisition companies (SPACs) are public companies organized to die. Unlike ordinary corporations, which enjoy perpetual existence by default, SPACs are legally required to consummate a merger within a fixed period--usually two years, never more than three--or else liquidate and return investors' cash.
This Article takes that clock seriously and argues that limited life is foundational to the SPAC form: it disciplines sponsors by preventing indefinite warehousing of capital, reassures investors by guaranteeing liquidity, and makes the form marketable in the first place. A perpetual SPAC would be good for nobody.
At the same time, the SPAC clock distorts incentives, creating end-period pressures to close "any deal before no deal." Delaware fiduciary duty law, SEC disclosure reforms, and reputational markets--all operating in the shadow of the deadline--mediate these countervailing forces.
SPACs are one member of the broader class of organizations intentionally endowed with a fixed lifespan. Other examples include private equity funds, spenddown foundations, and government agencies subject to sunset laws. Situating SPACs within the author's broader Temporal Governance framework reveals duration as a central lever of organizational design. Perpetuity is not destiny. Time can serve as the fulcrum of governance--and for SPACs, it is the variable without which the form could not exist.
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