What is a SPAC?
SPAC means Special Purpose Acquisition Company, this kind of company and method is usually done to acquire a private company. Basically, a SPAC is a publicly trade buyout company that raise collective investment funds through an initial public offering (IPO) for the purpose to acquire a private company in a certain time.
It may be sound a little bit weird but in fact a SPAC may be think as:
- Nothing more than a vehicle for an investment bank to acquire a private company.
- A SPAC can be looked at a shell that doesn’t have activity and raises capital through an IPO to acquire an unspecified private company.
Why should you consider a SPAC?
- The Investment is completely transparent.
- Lower risks for the investment due to experience of the management.
- The money raised through the IPO of an SPAC is put into a trust where it is held until the SPAC identifies a merger or acquisition opportunity to pursue with the invested funds.
- Investors also have the knowledge of the possible target and everything what the management is planning to work on.
- After the acquisition, high returns are expected and possible future prosperous business.