The way a special purpose acquisition company works is that a sponsor raises a bunch of money and then goes out and looks for a private company to take public using that money. In theory anyone could do this. I could launch a SPAC, the SPAC Stuff Acquisition Co., and try to raise money from the readers of this column. Maybe it would work. Then I’d have some money in the bank, and then I’d go out and look for a company to acquire. How would I do that? I don’t know. I don’t personally know anyone who runs a big private company that they’d like to take public. I suppose I could call up some investment bankers and say “hey do you know any companies that would like to merge with a SPAC?” But I gather that hundreds of SPACs are calling those bankers every day and, you know, wait times are long.
In practice the people who launch SPACs — and particularly the people who launch successful SPACs — tend to be people who know a lot of people who run companies that they might want to take public. Sometimes these SPAC sponsors are successful entrepreneurs or operators with good networks, but often they are private-equity or venture-capital investors, or activist hedge fund managers, or mergers-and-acquisitions investment bankers. They are people who are in the deals business, people whose experience is in buying companies or doing something closely adjacent. Every day they go to work in the company-buying business. Maybe they run a private-equity fund that buys companies and a family office that buys other companies and a credit fund that lends to other people who buy companies; whenever they meet with a company they think “which pocket should I buy this company from?” The SPAC is just another tool, another pool of cash, another source of fees, for their basic business of buying companies.
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November 02, 2021 at 12:16AM
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Trump SPAC Had a Head Start - Bloomberg
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