Special Purpose Acquisition Company (SPAC)

Definition:

A special purpose acquisition company which is typically sponsored by an experienced investor and/or management team. The SPAC has historically also been known as a “blank check” company or a “blind pool.” It has no prior business or operating revenue and is established to raise money in an IPO in anticipation of completing a future business combination. The future acquisition will not have been identified at the time of the IPO.

In January 2024, the SEC adopted final rules that mandate expanded disclosures and other obligations with respect to IPOs by SPACs and subsequent de-SPAC transactions. The updated rules require additional disclosures with respect to SPAC sponsor compensation, conflicts of interest, dilution and projections and other items aimed at investor protection.

Return to Glossary