When SPACs Attack! A New Force Is Invading Wall Street. – The Wall Street Journal

Former NBA star Shaquille ONeal has one. Does previous House Speaker Paul Ryan.
Its called a SPAC, and increasingly it is the preferred source of funding for private companies looking to go public. Richard Bransons space-exploration firm Virgin Galactic Holdings Inc. went public through a SPAC in 2019, and sports-wagering firm DraftKings Inc. did so last year.
“If you dont have your own SPAC, youre no one,” stated Peter Atwater, founder of research study firm Financial Insyghts.
SPACs– which stands for special-purpose acquisition companies– are essentially big swimming pools of money listed on an exchange. Their function is to discover a private company, buy it and take it public rapidly. Some on Wall Street call them “blank-check companies”since the investors backing the SPAC set up their cash months before an acquisition target is determined, relying on individuals running the show to find a bargain.
These deals are creating a great deal of interest due to the fact that they produce big paydays for their creators, make it easier for startups in hot markets such as electrical vehicles to capitalize on a frothy run-up in the stock exchange and deal everyday investors a brand-new course to a hot stock. When a SPAC buys a company, it merges with it in a sort of sped up IPO procedure– a so-called “reverse merger”– while bypassing the normal scrutiny an IPO receives.

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