📚 Stock Market Glossary

Clear, beginner-friendly explanations, real-world analogies, and visual formulas for key stock market terminology.

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Total 649 terms available

SPAC (Special Purpose Acquisition Company)

Corporate & Tech

💡 Key Takeaway: A shell company listed on a stock exchange with the sole purpose of acquiring a private business.

Empty Piggybank Analogy: A SPAC lists an empty piggy bank filled only with cash, searching for a profitable company to place inside.

😎 10-Second Show-off Pro Tip for Friends!

😎 Show-off Tip: Say, 'Buying a SPAC near its $10 NAV provides an asymmetric risk profile with a built-in downside floor via trust liquidation.'

STEP 1

A SPAC is a blank-check shell company formed strictly to raise capital through an IPO for merging with an existing private firm.

STEP 2

Merger Timeline: After listing (typically at $10 per share), the SPAC sponsor has 24 to 36 months to finalize a target merger.
Downside Floor: If no acquisition occurs within the deadline, the trust account liquidates and returns funds to shareholders with interest.

STEP 3

SPACs offer private companies a faster, streamlined alternative to traditional IPO processes.

📊 Formula for calculating refund when liquidating SPAC

Liquidation return per share = (trust deposit + accumulated interest) ÷ total number of shares issued

▶ Even if the merger fails, the public offering price is 2,000 won (or $10) + interest is received

Category	General IPO listing	SPAC merger listing
Listing entity	Companies engaged in existing business	Cash Only Paper Company (SPAC)
Duration	9 months to 1 year or more (long)	3 to 6 months (expedited)
Public offering price decision	Confirmed through demand forecast	Negotiated merger ratio between SPAC and unlisted company

DraftKings successfully listed on NASDAQ by merging with a SPAC, bypassing conventional IPO delays.