A Special Purpose Acquisition Company commonly referred to as SPAC, is a shell company that isn’t operating but is publicly listed.
SPACs offer retail investors an opportunity to invest in privately held companies that are considered promising.
This kind of partnership can unlock additional capital resulting in the appreciation of their portfolios.
SPACs are a great way of investing in promising companies without going through the traditional IPO investing hoops.
they are supposed to perform due diligence before launch. But on the other hand, there is little or no documentation required in SPAC.
SPAC sponsors are typically compensated for the risk as they are given a bigger discount to the target company’s price.
There is fluctuation in the market price when they start trading, which can be significant even before identifying a target.