What is a SPAC?

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Are SPACs a Smart Investment Option for 2022?

Today, we will answer the question, what is a SPAC, and offer the pros and cons of the method as we see them. Read on to get the knowledge you need to answer the questions when someone asks.

SPAC History

The first Special Purpose Acquisition Company was created in 1993 by Bill Ackman. Since then, they have acquired Hertz Global Holdings Inc., Burger King, and Red Roof Inn.

How Do They Work?

SPAC investors are betting that management can identify target companies with stock prices undervalued by the market and buy them at a discount within two years.

Pro of Investing in SPACs

You could get some upside potential if management finds an undervalued business that’s worth buying on a discount (and becomes profitable once acquired).

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