Performance analysis of healthcare-focused special purpose acquisition companies

The Covid-19 pandemic has accelerated some structural changes in the healthcare industry, and several health-tech start-ups thrived by providing innovative solutions to the challenges imposed by the pandemic. To finance their growth, many of these companies went through mergers with Special Purpose...

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Autores principales:	Gimede Gigante, Daniele Notarnicola
Formato:	article
Lenguaje:	EN
Publicado:	LLC "CPC "Business Perspectives" 2021
Materias:	financial innovation IPO market returns mergers and acquisitions US Finance HG1-9999
Acceso en línea:	https://doaj.org/article/d12d09226c424fe7876d713b1155e914
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spelling	oai:doaj.org-article:d12d09226c424fe7876d713b1155e9142021-11-09T12:45:17ZPerformance analysis of healthcare-focused special purpose acquisition companies10.21511/imfi.18(4).2021.141810-49671812-9358https://doaj.org/article/d12d09226c424fe7876d713b1155e9142021-11-01T00:00:00Zhttps://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/15799/IMFI_2021_04_Gigante.pdfhttps://doaj.org/toc/1810-4967https://doaj.org/toc/1812-9358The Covid-19 pandemic has accelerated some structural changes in the healthcare industry, and several health-tech start-ups thrived by providing innovative solutions to the challenges imposed by the pandemic. To finance their growth, many of these companies went through mergers with Special Purpose Acquisition Companies (SPACs). The paper investigates the market performance of healthcare-focused US-listed SPACs. The study aims to analyze the returns that healthcare SPACs offer to their investors and ascertain the determinants that drive these returns over a sample of 33 SPACs that merged with a healthcare firm between 2018 and 2021. Linear regression is employed to identify the drivers of SPACs’ market performance. Portfolio analysis is also performed and compared against the Russell 2000 and the S&P500 Healthcare Indexes.The first outcome accomplished by the analysis is that a portfolio made of healthcare-SPACs underperforms small-cap firms by 2.14% and the healthcare industry by 6.72% over a two-year period, even if the difference in the returns of the healthcare SPACs portfolio and the two benchmarks is not statistically significant. Moreover, a high level of redemptions, the presence of serial SPAC sponsors, cross-border deals, private equity and venture capital funds as sellers, and a high percentage of boutique investment banks among the sell-side advisors seem to negatively affect the returns of healthcare-focused SPACs with a significance level of at least 10%. Instead, a larger number of buy-side advisors appears to be beneficial for healthcare-focused SPACs’ market performance.Gimede GiganteDaniele NotarnicolaLLC "CPC "Business Perspectives"articlefinancial innovationIPOmarket returnsmergers and acquisitionsUSFinanceHG1-9999ENInvestment Management & Financial Innovations , Vol 18, Iss 4, Pp 150-165 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	financial innovation IPO market returns mergers and acquisitions US Finance HG1-9999
spellingShingle	financial innovation IPO market returns mergers and acquisitions US Finance HG1-9999 Gimede Gigante Daniele Notarnicola Performance analysis of healthcare-focused special purpose acquisition companies
description	The Covid-19 pandemic has accelerated some structural changes in the healthcare industry, and several health-tech start-ups thrived by providing innovative solutions to the challenges imposed by the pandemic. To finance their growth, many of these companies went through mergers with Special Purpose Acquisition Companies (SPACs). The paper investigates the market performance of healthcare-focused US-listed SPACs. The study aims to analyze the returns that healthcare SPACs offer to their investors and ascertain the determinants that drive these returns over a sample of 33 SPACs that merged with a healthcare firm between 2018 and 2021. Linear regression is employed to identify the drivers of SPACs’ market performance. Portfolio analysis is also performed and compared against the Russell 2000 and the S&P500 Healthcare Indexes.The first outcome accomplished by the analysis is that a portfolio made of healthcare-SPACs underperforms small-cap firms by 2.14% and the healthcare industry by 6.72% over a two-year period, even if the difference in the returns of the healthcare SPACs portfolio and the two benchmarks is not statistically significant. Moreover, a high level of redemptions, the presence of serial SPAC sponsors, cross-border deals, private equity and venture capital funds as sellers, and a high percentage of boutique investment banks among the sell-side advisors seem to negatively affect the returns of healthcare-focused SPACs with a significance level of at least 10%. Instead, a larger number of buy-side advisors appears to be beneficial for healthcare-focused SPACs’ market performance.
format	article
author	Gimede Gigante Daniele Notarnicola
author_facet	Gimede Gigante Daniele Notarnicola
author_sort	Gimede Gigante
title	Performance analysis of healthcare-focused special purpose acquisition companies
title_short	Performance analysis of healthcare-focused special purpose acquisition companies
title_full	Performance analysis of healthcare-focused special purpose acquisition companies
title_fullStr	Performance analysis of healthcare-focused special purpose acquisition companies
title_full_unstemmed	Performance analysis of healthcare-focused special purpose acquisition companies
title_sort	performance analysis of healthcare-focused special purpose acquisition companies
publisher	LLC "CPC "Business Perspectives"
publishDate	2021
url	https://doaj.org/article/d12d09226c424fe7876d713b1155e914
work_keys_str_mv	AT gimedegigante performanceanalysisofhealthcarefocusedspecialpurposeacquisitioncompanies AT danielenotarnicola performanceanalysisofhealthcarefocusedspecialpurposeacquisitioncompanies
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Performance analysis of healthcare-focused special purpose acquisition companies

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