Insights + Resources

What is a SPAC?

Mar 3, 2021

What is a SPAC?

The acronym “SPAC” is showing up more often these days because there is some big money behind the revitalized investment approach.

SPAC stands for Special Purpose Acquisition Company, and they are sometimes referred to as blank check companies. SPACs raised more than $80 billion through 237 initial public offerings in 2020, accounting for more than half of the money raised through IPOs. By comparison, SPACs raised just $10 billion two years earlier.1,2

SPACs tend to grab headlines because, on occasion, a high-profile athlete or celebrity is involved. In fact, 15-time NBA All-Star Shaquille O’Neal and baseball executive Billy Bean of Moneyball fame are both involved with SPACs.3

SPACs are development-stage companies that have no specific business plan or purpose. So why on earth are investors pouring so much money into these companies?

Because SPACs are looking to get involved in mergers and acquisitions or create a business combination with one or more businesses. SPACs typically look to invest in companies with untapped potential and attempt to create value by providing the money to help these companies grow. In exchange, SPAC investors take an equity stake in the business.4

Critics say SPACs have come too far too fast, and there is too much money chasing fewer opportunities. They expect SPACs deal quality will fall, which will bring media attention and regulatory scrutiny.5

Like all investments, it’s important to remember that SPACs involve risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of SPACs will fluctuate as market conditions change. When sold, a SPAC may be worth more or less than its original cost.

If you see a SPAC that draws your attention, let me know. We’d welcome the opportunity to hear your thoughts, and we may be able to provide some insight.

For more insights and resources, be sure to sign up for our Weekly Market Commentary. Follow our YouTube channel where we regularly post our Epic Market Minute videos. Follow us on LinkedIn, or like us on Facebook. And as always, please don’t hesitate to reach out to a dedicated service professional at Epic Capital.

Tags: , , , , ,

More Insights

Apr 21, 2021

Recently, you may have seen reports that a record-low number of homes are available for sale—roughly 1.03 million nationwide. If you compare that to the average number of homes for sale during the past 10 years, it’s no surprise that many hopeful homebuyers are having issues securing a home. But why exactly is the housing … Continue reading “Forces Driving the Housing Market”

Apr 19, 2021

It can be exhausting trying to keep up with the whims of Wall Street. Lately, the financial markets have been fixated on federal taxes and what may be proposed on Capitol Hill in the weeks and months ahead. Wall Street’s focus on taxes closely follows its attention on the 10-year Treasury yield. And it wasn’t … Continue reading “The Whims of Wall Street”

Apr 16, 2021

President Joe Biden introduced the much-anticipated American Jobs Plan, which outlines an approach to spend roughly $2.2 trillion on the nation’s infrastructure and other projects. As part of the legislative process, the Biden administration also laid out a proposal for paying for the domestic investment. The plan includes raising the corporate tax rate to 28% … Continue reading “Paying for the Infrastructure Bill”

Apr 14, 2021

Financially, many of us associate the spring with taxes – but we should also associate December with important IRA deadlines. This year, like 2020, will see a few changes and distinctions. December 31, 2021, is the deadline to take your Required Minimum Distribution (RMD) from certain individual retirement accounts.

Apr 12, 2021

There’s an old Wall Street maxim that says, “markets climb a wall of worry.” And these days, there’s plenty to worry about with the trend in long-term interest rates and bonds.

Insights + Resources >