Money, Speed and Certainty through SPAC’s (Special Purpose Acquisition Companies)

Are we potentially looking at the greatest wealth creation event?

For the ones who have their ears close to the startup world would be aware of the heightened attention and traction that SPACs are picking up in the recent past.

In this year, approximately $30 billion has been raised through SPAC (Special Purpose Acquisition companies) or blank check acquisition funds.

So what is SPAC: A Special Purpose Acquisition Company (SPAC) is a company created solely to merge or acquire another business and take it public – a cheaper, faster alternative to an initial public offering (IPO). Investors essentially write blank checks to SPACs, which can take up to two years to target and buy another firm.

Let’s deep dive to understand what is driving this boom.

Factor 01: Not just an alternative to traditional IPOs

For beginners, SPAC is not just an alternative to a traditional IPO route. Merger with a SPAC allows the target company’s investors to retain a stake while gaining liquidity, and deal negotiations can be done directly, secretly and quickly. SPACs typically have two years from the IPO date to complete a merger.

Factor 02: Popular SPAC targets and their soaring valuations