A SPAC is a “Special Purpose Acquisition Company”. It is a type of investment vehicle that is created for the purpose of acquiring an existing company. A SPAC is typically formed by a group of investors who raise capital through an initial public offering (IPO) with the goal of acquiring an operating business. The investors in a SPAC are betting on the management team’s ability to identify and acquire a target company that will generate returns for the SPAC’s shareholders.

Once the SPAC has raised sufficient capital, it uses the funds to search for a target company to acquire. If a suitable target is found, the SPAC will then complete the acquisition and the target company will become a publicly traded company as a result. If the SPAC is unable to find a suitable target, the SPAC may be liquidated and the capital returned to investors.

SPACs have gained popularity in recent years as an alternative to traditional IPOs and as a way for private companies to go public quickly and efficiently. These are traditionally available to institutional investors and very, very wealthy family offices.