Special Purpose Acquisition Company (SPAC)

A Special Purpose Acquisition Company (SPAC) is a type of investment vehicle created to raise capital through an initial public offering (IPO) with the intention of acquiring an existing private company. Essentially, a SPAC is a shell company without operations, formed to attract investors. Once it goes public, it seeks a target company to merge with, allowing that company to become publicly traded without going through the traditional IPO process. Investors in a SPAC hope to profit from the acquisition by gaining shares in a potentially successful company that was previously private.