With more traditional offerings sitting out today’s choppy markets, some of the hottest recent IPOs have been from so-called blank check companies. These special purpose acquisition companies, or SPACs, float shares to fund acquisitions — a strategy that looks promising as credit woes sideline more leveraged buyers like private equity.

But popularity may come at a price: bigger SPACs mean big investors like hedge funds can crater a deal by witholding support — potentially at the expense of the SPAC sponsor. 

If a SPAC doesn’t get a deal done, shareholder money is returned by the sponsor — so there’s always a chance sponsors will buy out naysayers at a premium to get the deal done. For the hedge funds that’s a low risk proposition — for sponsors it’s increasingly anything but. That’s why market sources say some sponsors are starting to think twice about going ahead with SPAC plans.

The number of SPAC offerings last year nearly tripled from 2006 and topped $12 billion. So far this year shareholders have rejected deals at two SPACs, which typically give themselves 12 to 18 months to do a deal. With so many deals having to be done over the next few months, hedge funds should have ample opportunity to squeeze sponsors this year. Below is a table of dissolved SPACs from DealFlow Media.