by Wolf Richter
Another sign the zoo has gone nuts. “If you don’t have your own SPAC, you’re nobody.”
The business of SPACs is setting stunning records. A SPAC (special-purpose acquisition company) is a “blank-check company” with no business activity that raises funds from investors via an IPO and will then attempt to use those funds to buy a startup company. For the startup company, getting acquired by a SPAC is an alternative to an IPO. There are fewer disclosures to make, compared to a standard IPO. For Wall Street, there are huge fees to be made. And insiders, including those that start the SPACs, make tons of money. So all the building blocks are in place.