Many observers identified 2020 as the year of the SPAC – special purpose acquisition company – but 2021 is rapidly surpassing it in activity and scale.

A pertinent question is emerging: are there any companies too large to pursue a public listing via a SPAC merger?

The recent trading launch of the most highly valued company to date to go public through a SPAC provides a compelling example: United Wholesale Mortgage, a Pontiac, Michigan-based company established 35 years ago and a leading U.S. mortgage provider.

Although its share price experienced a slight dip, closing at $11.35 compared to its initial price of $11.54, the outcome remains highly positive for those involved. The company was assessed at a substantial $16 billion following the approval of its merger with Gores Holdings IV earlier this week.

This situation is noteworthy because, despite UWM’s considerable size, its journey to becoming a public entity took under a year, starting with Gores Holdings IV’s IPO in late January 2020, which generated roughly $425 million in capital.

The deal was spearheaded by Alec Gores, the billionaire founder of the private equity firm Gores Group. The agreement, announced in September, was further bolstered by a $500 million private placement – a common addition once a target company is identified and agrees to the merger terms. Typically, these target companies are significantly larger than the blank-check companies they are merging with.

It’s also significant that UWM is an established, profitable business, reporting $1.3 billion in revenue for the third quarter of the previous year. The company’s CEO, whose father founded the business in 1986, stated last autumn that the company is “massively profitable.”

This contrasts with the trajectory of many recent SPAC entrants, such as Opendoor, Luminar Technologies, and Virgin Galactic. These companies are still in the development phase, requiring capital to sustain operations and potentially facing challenges in securing further funding from traditional private investors.

SpaceX director Steve Jurvetson recently highlighted this point, observing that Virgin Galactic has demonstrated “no positive business development” since becoming publicly traded. He noted their announcement of a hypersonic plane development lacks connection to their core business of suborbital spaceflights, which have yet to commence for paying customers.

If more established, profitable companies with demonstrable revenue streams – businesses akin to UWM – increasingly favor SPACs over conventional IPOs, it could reshape perceptions of SPAC candidates as companies with limited alternative options.

This shift could also broaden the scope of companies considered suitable for public listing via SPACs, potentially leading to even larger transactions.

It is highly probable that UWM will not retain the title of ‘biggest SPAC deal ever’ for an extended period. Interest in SPACs remains exceptionally high, and one vehicle, in particular, appears poised to claim the record: the SPAC led by billionaire investor William Ackman, which raised $4 billion last summer.

The anticipated deal is expected to be substantial. Reports indicate that Ackman initially explored taking Airbnb public through his SPAC. When Airbnb declined the proposed merger, he allegedly approached Bloomberg, the privately held media company – a claim Bloomberg has denied.

Given the typical two-year timeframe for SPACs to complete a merger, speculation is rife regarding Ackman’s plans for the $4 billion raised, with his commitment to contribute an additional $1 billion from his hedge fund further fueling anticipation.

In the last 22 days alone, 67 new SPAC offerings have emerged – matching the total for all of 2019. These offerings have collectively raised $19.2 billion, with no apparent slowdown in fundraising activity.

This week, Fifth Wall Ventures, a four-year-old, Los Angeles-based venture firm specializing in proptech, filed plans to raise $250 million for a new blank-check company.

Intel Chairman Omar Ishrak, formerly CEO of medical device company Medtronic, was reported to be planning to raise between $750 million and $1 billion for a blank-check firm focused on health tech investments.

Gores Group, meanwhile, registered plans on Wednesday to raise $400 million in an IPO for its latest blank-check company, marking its seventh SPAC venture to date.