Entity Types

Special Purpose Acquisition Company

Acronym
SPAC

A special purpose acquisition company is formed strictly to raise capital through an initial public offering in an effort to acquire an existing company. Also called a "blank check company," a SPAC has no commercial operations. It must complete an acquisition within two years. Otherwise, a SPAC must return its funds to investors. Investors can range from the general public to prominent private equity funds.

  • In 2020, more than 50 SPACs have been formed in the U.S., as of the beginning of August, raising some $21.5 billion.
  • The significant increase in SPACs is yet another sign of the intense speculative nature of investors in today‚Äôs financial markets.