An acronym for "special purpose acquisition company",
SPACs seem to be the new investment craze among music artists and
sports figures. They've been around since the 1990s but have
gained traction during the pandemic.
A SPAC is a shell company that lists on a stock exchange, with
the aim of buying a private business and taking it public. Everyday
investors invest in SPACs in the hope that the SPAC finds a
successful merger candidate and makes them a high return.
So why are celebrities associating themselves with these
investment vehicles? Celebrities are brought in as promoters to
attract investors (aka "strategic advisers"). In return,
celebrities receive a stake in the company. If the company does
well, this could mean a multimillion-dollar return.
