SPAC

A special-purpose acquisition company is a shell company that goes public itself with no operating business, holding investor cash in trust while sponsors search for a private company to merge with. When a target is found, the merger — sometimes called a de-SPAC transaction — takes the operating company public.

SPACs offer a faster, more flexible path to public markets than a traditional IPO and allow forward-looking financial projections that S-1s discourage. They were extremely active in 2020–2021 and have since cooled significantly amid weaker post-deal performance and tighter SEC scrutiny.