What is a SPAC? Should You Invest in SPACs?

SPACS or special acquisition companies are becoming a popular way to raise money.

This article will answer the question, what is a SPAC, and offer the pros and cons of the method as we see them.

What is a SPAC?

A SPAC is a company that raises money from investors to acquire another company.

How Do They Work?

SPACs have two years to find a target company or return the money to investors (including retail and institutional investors).

Pros of Investing in SPAC

They are easy to access for many investors since you do not need special qualifications like passing through accredited investor status.

Cons of Investing in SPAC

They are highly speculative investments since there isn’t much known about their assets after finding another company or business to buy out.

Why Would a Company Choose to Invest in a SPAC?

They may feel like their business is no longer growing, and they want to explore other opportunities outside of their current industry.

What Is the Process of a SPAC Merger?

The SPAC raises money from investors by selling shares in an initial public offering (IPO).

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