Special Purpose Acquisition Companies (SPACs)

A Special Purpose Acquisition Company (SPAC) is a company formed specifically to raise funds through an initial public offering (IPO) with the goal of eventually acquiring or merging with an existing business. Investors buy shares in the SPAC without knowing which company it will partner with, effectively betting on the sponsors' ability to identify a promising target. Once a suitable company is acquired, it becomes publicly traded under its own name. SPACs offer a faster, potentially less costly alternative to traditional IPOs, providing private companies an easier route to enter the public markets.