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What Is A SPAC? - Everything SPAC And How It Works (Video)
Someone in one of the discussion threads asked about this so I'm posting this SA article for informational purposes only.
Special Purpose Acquisition Companies - What are they? How are they created? What does the capital structure look like? What are warrants? Watch this before you invest in SPACs.
2021 has been the year I invest in SPACs! Thanks, @Mark. Very interesting, alternatives ways for many new companies to come to market, without the trappings and expenses of an IPO. Still have yet to have one “de-SPAC”
Mark, thank you for posting about this area; although some of us have read bits and pieces, tis nice to have a discussion here. I do believe, if our house wants to remain an active investing house; we're going to have to hire a family member to keep track of the "trends". Not the price trends of a particular investment area....we have that covered; but the trends of NEW investing areas to digest the merits.
I'm wary about SPACs (aka "blank check" companies). When created, they usually don't own any companies so performing proper due diligence is impossible. Some companies that could not bear the scrutiny of the IPO process are going public via SPACs. SPAC sponsors may put up relatively little of their own money but often receive a 20% stake after a merger is completed. Speculation is fueling the recent popularity of SPACs. Sponsors may reap considerable profits, but I don't think this will end well for many retail investors. Link1 Link2
Before they were all the rage, Mrs. Ruffles's employer, which was owned by private equity, merged with a SPAC a few years ago to go public. It has done well based on the share price. Unfortunately, its sponsor started a few more SPAC’s whose mergers have not been so successful.
Comments
markets-are-always-changing
I was curious and invested in one SPAC recently in my field. So we'll see.
I do believe, if our house wants to remain an active investing house; we're going to have to hire a family member
When created, they usually don't own any companies so performing proper due diligence is impossible.
Some companies that could not bear the scrutiny of the IPO process are going public via SPACs.
SPAC sponsors may put up relatively little of their own money but often receive a 20% stake after a merger is completed. Speculation is fueling the recent popularity of SPACs.
Sponsors may reap considerable profits, but I don't think this will end well for many retail investors.
Link1
Link2