Curious about SPACs? Here’s what you should know.

The past year has brought along some interesting stocks in the spotlight. When many feared that the financial sector would take a massive hit, BNPL stocks soared and were the top gainers.

Similarly, the previous year was especially significant for SPACs or Special Purpose Acquisition Companies as their stocks gained immense popularity. However, SPACs have been around for a long time. The process of going public may take several years to take shape for most private companies. However, shell companies that have undergone an IPO are short-cuts for private companies wanting to go public. The lifecycle of a SPAC is shorter than the traditional IPO process, which is the major reason why private companies take an interest in the process. Generally, sponsors range from venture capitalists to hedge funds.

However, funding can come from political figures, celebrities, and larger private equity firms too. Part of the reason why SPACs have become the talk of the town is that many celebrities have sponsored them. Target companies that are acquired post an IPO also get media attention as well as increased profits. Shell companies have earned the reputation of being risky operations in nature. However, more efficient and updated laws have ensured that shell companies are not misused.

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