What do Taylor Swift’s record company and Asian “superapp” Grab have in common? They are both part of Wall Street’s recent dealmaking fad: special purpose acquisition companies (SPACs).
SPACs are shell companies that are floated on the stock market with one purpose: to buy another company. This aims to achieve the same as a stock market listing or initial public offering (IPO), but in reverse. Instead of a traditional company seeking to raise capital from investors through an IPO, with SPACs, the empty listed company is set up first. For this reason, they are sometimes known as blank-check companies.
Depending on where the SPAC is listed, whoever is in control usually has two or three years to find a company to buy. If they fail, the SPAC will be wound up and the funds returned to investors.
The SPAC explosion
SPACs have been around since the 1990s, but they exploded in popularity in 2020 and early 2021. This is partly because there has been more and more capital looking to…
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Source : fastcompany.com
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