It's worth noting that Matt Levine has a lot of other good writing on SPACs. (And economics in general. To anyone reading this comment, I highly recommend his daily newsletter "Money Stuff", which is where these excerpts come from).
On how SPACs can end up giving more money to banks than IPOs:
"But for another thing, a lot of people are dissatisfied with the process for selling stock; they think that investment banks make too much money and do not have issuers’ interests at heart, and so they are looking for ways to sell stock more cheaply and to cut out the role of the investment banks. And the ways that they have discovered, the methods that they tout to cut out the middleman and free companies from the tyranny of Wall Street banks, all involve (1) hiring Wall Street banks and (2) paying them tons of money. It’s so good!
[...]
Venture capitalists and SPAC sponsors sometimes suggest that this is a way to cut out Wall Street and avoid expense, but that is not true. Not only is the SPAC expensive because its sponsor—the person who sets up the shell company and searches for a target to take public—charges for her efforts, but the SPAC also has to pay banks to do its own IPO. And maybe to search for the target, execute the merger, and otherwise be around to provide banking services. And so, unsurprisingly, banks love SPACs.
[...]
This is really the kind of business you want to be in, the kind where (1) it is so lucrative that your customers are constantly complaining that you make too much money, but (2) when they want to disrupt your business, they come to you to disrupt it and pay you even more money."[1]
Another article mentions that companies sometimes prefer merging with SPACs than having an IPO in volatile markets due to the uncertainty involved in an IPO:
"Compared to an IPO, the SPAC is much less risky for the company: You sign a deal with one person (the SPAC sponsor) for a fixed amount of money (what’s in the SPAC pool 2 ) at a negotiated price, and then you sign and announce the deal and it probably gets done. With an IPO, you announce the deal before negotiating the size or price, and you don’t know if anyone will go for it until after you’ve announced it and started marketing it. Things could go wrong in embarrassing public fashion.
In volatile times, that certainty is worth a lot more, so companies are looking for it.
[...]
There is a problem, a risk: Companies want to go public, but they are worried about the risk of the market collapsing. There is a solution, a holder of the risk: A SPAC will take a company public in a fully sold deal with a fixed price and size, so they don’t have to worry about the market collapsing. There is a price: The SPAC doesn’t take this risk because it is nice, or foolish; it takes this risk because it expects to make much more money than a typical IPO investor. In normal times, the risk is low, the compensation is low, and the tool is not used that much. In volatile times, the risk is high, the compensation is high, and people talk about SPACs a lot." [2]
He then goes on to note that SPACs have their risks too, including the same kind of public embarrassment that an IPO can bring. The share-holders of the SPAC can vote against an announced merger, which happened last year when the investors of the SPAC Far Point decided against merging with the company Global Blue.
"Ordinarily, in a public-company merger, if a board of directors changes its mind like this it needs to pay the other side a big termination fee, but SPACs are just pots of money held in trust for public shareholders so its harder to do that; the Far Point merger agreement has no termination fees. Just as in an IPO, the deal isn’t really done until you get the cash, and while you’re more likely to get the cash in a SPAC merger than in an IPO, there’s still some risk." [2]
[1] https://www.bloomberg.com/opinion/articles/2020-07-30/kodak-...
[2] https://www.bloomberg.com/opinion/articles/2020-07-14/everyo...