A SPAC (special purpose acquisition company) is a shell company that raises IPO capital to acquire a private company within 18 to 24 months. Also called a "blank-check company," the SPAC merges with its target so the target becomes publicly traded without going through a traditional IPO, or liquidates and returns capital to investors if no acquisition is completed. SPACs have existed for decades but exploded in 2020 to 2021 before collapsing sharply, and now occupy a smaller niche than at peak.
The mechanic, simplified: a SPAC sponsor (typically a well-known executive, investor, or operator) forms a shell company and IPOs it, raising capital from public investors who buy "units" (typically $10 each) consisting of one share and a fracti...