SPACs Explained

A special purpose acquisition company (SPAC) is an investment vehicle that enables companies to go public without going through an initial public offering (IPO), which is a complex and costly process that can take months or even years to complete. Recently popular among hedge funds and celebrities alike, a SPAC raises funds from the public, who receive equity in exchange for capital, before announcing an intended acquisition target, effectively acting as a blank check for the SPAC. 

Because SPACs are a relatively recent development that give significant latitude to the decision-makers, there is notable investment risk associated with them. SPACs may be here to stay, but it is yet to be seen how beneficial they will be for investors.

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- Anthony Winkels is Managing Partner and Wealth Advisor at Fortis Wealth Management