SPACs, or special acquisition corporations, were all the rage in 2020 and 2021, including investors such as sports icons and media moguls. Also referred to as “blank-check companies,” SPACs offer an alternative way for private firms to go public and saw a resurgence of popularity during the deal-crazed early days of the pandemic.
Initially established in the 1990s, SPACs serve as a way for private companies to quickly buy and take a company public. In many cases, investors invest in the SPAC before the acquisition target is identified. While a SPAC vehicle can help to avoid the lengthy and expensive process of a traditional initial public offering, the drawbacks include a compressed timeline.
