Are SPACs a Smart Investment Option for 2022?

SPACS or special acquisition companies are becoming a popular way to raise money. It is a unique and innovative concept that, on the surface, doesn’t seem to make sense.

This story will answer the question, what is a SPAC, and offer the pros and cons of the method as we see them. Read on to get the knowledge you need to answer the questions when someone asks.

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.

What is a SPAC?

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

SPAC History

SPACs have two years to find a target company or return the money to investors (including retail and institutional investors).

How Do They Work?

SPAC investors are betting that management can identify target companies with stock prices undervalued by the market and buy them at a discount (or on the cheap) within this time frame.

- They are easy to access for many investors since you do not need special qualifications like passing through accredited investor status.

Pros of Investing in SPACs

- There are not any lockup periods where you can’t sell your shares of SPAC stocks right away, unlike with traditional IPOs.