equirus-logo

SPAC

SPAC Full Form: Special Purpose Acquisition Company

SPAC.webp

Key Highlights

  • A SPAC, or Special Purpose Acquisition Company, is essentially a shell company that doesn’t have any business of its own.

  • It raises money by going public through an IPO, with the main goal of merging with or acquiring an existing private company.

What is SPAC?

A SPAC, or Special Purpose Acquisition Company, is essentially a shell company that doesn’t have any business of its own. It raises money by going public through an IPO, with the main goal of merging with or acquiring an existing private company.

Key Points

  • Blank Check Company: SPACs have no products or services—just cash from investors, ready to fund a future deal.

  • Money in Trust: The cash raised in the IPO is held in a trust account, only to be used for buying or merging with a company.

  • Time Limit: SPACs usually have 18–24 months to find and buy a company, or they shut down and return the money to investors.

  • Sponsors’ Perks: The people who set up the SPAC (sponsors) often get a 20% stake for a small initial investment.

  • Going Public Fast: When a SPAC merges with a private company (called "de-SPACing"), that company becomes publicly traded, skipping some IPO red tape.

  • Investor Choice: If investors don’t like the proposed deal, they can get their money back with interest.

Why It Matters?

SPACs offer a quicker, more flexible way for private companies to hit the public stock market, making it easier to raise funds and grow.