” Special Purpose Acquisition Company Also Referred To As A Blank-Check Company ”
” SPACs Are Holding Companies That Raise Capital For The Intent Of Acquiring A Non Public Company “
Everything You Need To Know About SPACs
SPAC stocks are simply publicly traded companies that take the money you invest with them and put it into a holding account, in which that capital can only be used for the purpose of acquiring a none publicly traded company.
Typically these SPACs also refereed to as blank-check companies have 2-3 years to make an acquisition, or the capital raised simply gets returned to the share holders for it’s fair market value.
SPAC stocks only recently have become more popular then ever, since there inception in the 1990’s with the intent to help private holding companies raise capital on an IPO to enter the private markets.
SPACs give a special purpose to the market, allowing investors to own companies before they IPO without having to be accredited. This offers a massive advantage as you may recall companies like Virgin Galactic or Nikola both came to the public market through a SPAC.
SPAC stocks also tend to offer warrants which in simple terms mean you may have access to more shares at a cheaper rate after an the IPO For example, if the share price IPO is $10, the warrant may be exercised at $11.50 a share. The warrants become available to exercise anywhere to twelve months after the SPAC IPO.
SPAC stocks offer a wide variety of options to not only the investors but the companies trying to raise capital as well. With companies as large as Goldman Sachs & even billionaire investors like Bill Ackman involved, this exciting new trend in the stock market is worth paying attention to.
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