close
Edit Metric
Company
Value
Source
Source URL
Notes
Cancel
 
close
Edit  |  History
Details
Company:
Value :
Source:
Source URL:
Notes:
 
Feedback  |  FAQ
Get involved

Special Purpose Acquisition Company (SPAC)

Special Purpose Acquisition Companies (SPACs) are publicly traded funds that are created with the intent of acquiring other companies. SPACs typically begin with an IPO in which capital is raised to be used for the acquisitions. Although it can vary, management running the SPAC typically has 18-24 months in which they can propose acquisition targets. The interesting twist is that shareholders in the SPAC have the ability to approve or reject the acquisitions. If shareholders reject the acquistions, the SPAC is dissolved and money is returned to the investors.

A key component of a SPAC is the team of management principals that run the fund. These principals take on risk (startup and issuance costs are eaten by the principals if the SPAC gets dissolved), but with huge potential reward. If an acquisition target is successfully approved, the principals retain 20% of the company.

Hedge funds are common SPAC investors, as the option value of investing in the SPAC from the beginning is high because the investors have approval rights on proposed acquisitions.

According to Dealogic, in 2007, 66 SPACs went public, raising $12B.

The Shelf
Contributions
Help make Wikinvest better! Learn how to get involved. And create an account to build your reputation.
Did you know…?
Bookmarks
Worried about pump and dump?
We review changes
for stock spam
Want to make Wikinvest better?
We need your help,
contribute today
Do you write software?
We are recruiting
the best engineers
Like Wikinvest?
Spread the word —
Tell your friends!
Wikinvest © 2006, 2007, 2008. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki