A Special Purpose Acquisition Company (SPAC) is a company formed to raise money in an IPO with the intention of using the proceeds to acquire one or more privately held firms. As a type of shell company, a SPAC exists for the express purpose of acquiring other companies to take them public.

A SPAC is often nicknamed a “blank check company,” a reference to the cloud of uncertainty hovering over its early life. The sponsors of a SPAC — the founders responsible for the IPO — are prohibited from unveiling to investors the company they plan to target (that’s if the sponsors know themselves at the time of the IPO)