A special purpose acquisition company (SPAC) is a type of investment vehicle that aims to raise capital through an initial public offering (IPO) with the sole purpose of acquiring or merging with an existing private company. SPACs offer an alternative route for private companies to go public, bypassing the traditional IPO process and often providing a quicker and more flexible path to public markets.
For example, a SPAC raises $200 million in an IPO with the purpose of acquiring a technology company. Two years later, it merges with a private AI software firm, allowing that company to become publicly traded without going through a traditional IPO process — often faster and with greater pricing certainty.
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