What Exactly Are ‘SPACs’? Why They Will Matter in Travel This Year
Photo Credit: SpaceShipTwo Unity released for second glide flight over Spaceport America in New Mexico on June 25, 2020. Operator Virgin Galactic went public in 2020 via a SPAC, or special purpose acquisition company, helping to unite the investing craze in the travel sector. Virgin Galactic
Skift Take
Some travel sector startups will use special-purpose acquisition companies, or SPACs, to go public, instead of doing traditional IPOs. The trend has the makings of an investor frenzy. Here's our cheat sheet, covered in six questions and answers.
The boom of investor interest in SPACs has been one of the most remarkable trends in finance. So what are SPACs, exactly? And how might they appeal to travel startups looking to go public or get acquired?
A special purpose acquisition company (SPAC), or blank check company, is a shell company with no operations but that its backers create to acquire or merge with another company. The backers promise startup founders a chance to speed up and smooth out the path to an initial public offering (IPO), compared to a traditional, bank-led IPO.
"In 2020, more money was raised in SPAC IPOs than in all previous years combined," said Jay Ritter, a professor of finance at the University of Florida who studies IPOs. "There are now close to 300 recent SPAC IPOs searching for a merger partner. I expect that most of these will agree to merge with a private operating firm and take it public during 2021."
More than 218 special purpose acquisition companies went public in the U.S. last year, sai
