A special purpose acquisition company (SPAC), sometimes called blank-check company, is a shell company that has no operations but plans to go public with the intention of acquiring or merging with a company with the proceeds of the SPAC’s initial public offering (IPO).
Utilizing a SPAC has increased in recent years; 2019 had a record high of over 13B IPO fundraising activity and their popularity is increasing. According to Forbes over 90% of SPAC IPOs result in a business combination and in 2019 over $13B was raised in gross proceeds from 59 IPOs with an average IPO size of $230M. In 2020 as of July 9, over $12.4B in gross proceeds have been raised, from 39 IPOs with an average IPO size of $317M.
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