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Special Purpose Acquisition Company (SPAC)
Market Mechanics
A SPAC is a company with no operating business that raises money in an IPO in order to merge with a private company within a set time.
The money sits in a trust account until a deal closes, and if no deal happens in time it is returned to investors. The merger takes the target public without a traditional IPO, while the cheap shares granted to the sponsors can dilute other shareholders.
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