The SPAC Fad
SPACs are having (another) moment. SPAC stands for Special Purpose Acquisition Company. Often referred to as “blank-check” companies, a SPAC is initially just a management team. The team raises funds via IPO. Investors bet that the team will buy a private business and make it more valuable. Usually, the team specializes in a particular area. The last time SPACs were popular, management teams with experience in the energy sector were buying shale assets. Today, SPAC activity covers a wider range of ground. From gambling (Draft Kings) to space travel (Virgin Galactic), money is being raised to sidestep the traditional IPO in favor of SPACs. Not All Good Electric truck maker Nikola was an early darling of the SPAC movement. Nikola was supposed to be the Tesla (get it?) of the truck world. Truck orders poured in from Anheuser-Busch. Large investment firms across the world scrambled to buy in. General Motors…
