A special-purpose acquisition company (SPAC) is a shell company listed on the stockmarket by a sponsor, who uses the proceeds to find and merge with a private company, thereby taking it public. Investors may choose to redeem their shares or own part of the resulting business. The mechanism can be lucrative for sponsors (who take a cut) and their investment-bank advisers, but has tended to be less rewarding for ordinary investors.
SPACs were Wall Street's favourite vehicle during the pandemic-era boom. Central banks raised interest rates in 2022, deflating the market. An index tracking the biggest firms that went public through a SPAC shut down in 2024; of the 25 firms it contained at its mid-2021 peak, only one was worth more than it had been, and six had gone bankrupt.
A revival began in 2025, with more new SPAC listings expected than in 2023 and 2024 combined. The new wave is smaller but more speculative, dominated by cryptocurrency and artificial-intelligence ventures. Donald Trump took Truth Social, his social network, public by merging with a SPAC. Cantor Fitzgerald, the Wall Street bank formerly owned by Howard Lutnick, has been actively underwriting recent deals.
Better to be nouveau than never to have been riche at all.