J.P. Morgan
Pulled back from SPACs in 2021
Fees Earned
$1.1B
SPACs Underwritten
70
Bankrupt SPACs
3
Bankruptcy Rate
4.3%
Overview
J.P. Morgan was one of the first major banks to pull back from SPACs, sensing regulatory risk before its competitors. Despite early caution, the bank still earned over $1.1 billion in SPAC-related fees and underwrote numerous deals that would later crater. JP Morgan's relatively early exit was seen as shrewd risk management, but the bank had still profited enormously from the bubble.
Average Client Return
Average return for investors who held SPAC-merged companies underwritten by J.P. Morgan. The bank collected its fees at IPO regardless of subsequent performance.
Notable Deals
The Fee Structure Problem
SPAC underwriters like J.P. Morgan typically earned 2% of the IPO proceeds upfront, with an additional 3.5% deferred fee paid at deal completion. On 70 SPAC IPOs, this generated approximately $1.1B in fees.
Crucially, these fees were earned regardless of whether the SPAC found a good target or whether investors made money. The deferred fee was paid from the trust at merger completion — meaning the bank had every incentive to push mergers through, even with subpar targets.