# SPAC

*Corporate Finance & M&A — Finicade finance glossary*

A SPAC raises money in an IPO with no business at all, then hunts for a private company to merge with, typically within two years. Its economics are brutal for late investors: the sponsor takes roughly 20% of the shares for a nominal sum, and redemptions by early holders leave less cash than the headline. The 2020–21 boom produced post-merger returns that were, on average, sharply negative.

**Also known as:** blank check company, special purpose acquisition company

**Related terms:** [Reverse Merger](https://finicade.com/glossary/reverse-merger), [IPO (Initial Public Offering)](https://finicade.com/glossary/ipo), [Dilution](https://finicade.com/glossary/dilution), [Lock-Up Period](https://finicade.com/glossary/lock-up-period), [Sponsor](https://finicade.com/glossary/sponsor)

Source: https://finicade.com/glossary/spac