Nary a day goes by when we do not get an inquiry about SPACs.
This primer provides you with an introduction to SPACs. Among other
things, it explains what a SPAC is, lays out the economic terms of
the equity offered in a SPAC IPO, introduces the players that
inhabit the SPAC world and describes the benefits of going public
in combination with a SPAC instead of through a traditional
IPO.
After reading this primer, you will be able to answer the
following question: what do Shaquille O'Neal, Bill Ackman,
Serena Williams, former House Speaker Paul Ryan, Alex Rodriguez and
Chamath Palihapitiya have in common? The answer is provided
below.
Structure of a SPAC
What is a SPAC?
A SPAC is a special purpose acquisition company that raises a
pool of cash in an initial public offering, or IPO, and deposits
the cash proceeds from the IPO into a trust account. These funds
are used solely to acquire an operating company, referred to as a
target, in a business combination
