What is a SPAC? Are SPACs a Smart Investment Option for 2022?

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

They are typically listed on an exchange and have a board of directors and management team. Once they raise enough money, they will find a company to buy.

SPACs have been around for quite some time, but in 2020 there was a sizable SPAC boom.

248 SPACs went public in 2021 and raised a total of $83 billion. For comparison, there were only 59 that went public in 2019 and raised $13 billion.

SPAC History

The first Special Purpose Acquisition Company was created in 1993 by Bill Ackman, Pershing Square Capital Management founder. 

Since then, they have acquired companies such as Hertz Global Holdings Inc., Burger King, and Red Roof Inn.

SPACs exist in pretty much every industry. They have been used to acquire banking, oil, gas, real estate, retail, and technology industries.

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