Marks launch their own SPACs. They and other highly regarded management teams have acquired and taken well-known private companies public... like space-tourism company Virgin Galactic (SPCE), sports- betting website DraftKings (DKNG), and electric-truck maker Hyliion. The increased regulations, coupled with some of the world’s largest investment banks, legitimized the entire SPAC market for individual investors. The SPAC market has never been bigger, better, or safer. As more investors learn about them – and more money flows into them – I expect we’ll see some life- changing returns over the next couple of years. Now more than any other time in history, SPACs have investors’ best interests in mind. This has led to private-equity funds and even university endowments to invest huge sums of money into SPACs. The SPAC market has never been bigger, better, or safer. As more investors learn about them – and more money flows into them – I expect we’ll see some life-changing returns over the next couple of years. And in this special report, I’ll explain how... A ONE-OF-A-KIND INVESTMENT WITH HUGE UPSIDE AND LIMITED DOWNSIDE At first, it sounds too strange to be true...
A team of investors form a business – let’s call it Really Smart Acquisition Corporation (“RSAC”) – designed to raise capital to take a private company public. But RSAC can’t tell you what company it wants to take public. It might not even know yet. RSAC’s management goes out and raises a pool of money, telling investors, “We’re going to go out and find a great investment idea for this money.” The process of raising money is similar to an ordinary IPO process. The underwriter (a brokerage or bank) raises the funds by selling common stocks (i.e., regular shares of ownership in the company). But unlike a normal IPO, instead of buying shares in a restaurant chain or e-commerce company, for example, you own a share of RSAC’s pool of money. In the meantime, RSAC will hold the money in an account while management – known as the “sponsor” – goes out and looks for a deal. The sponsor goes out and looks at hundreds of transactions to try to find the best investment. It will usually specify a particular industry or geographic area for its target business or assets. Sponsors may not be prohibited from investing in any industry or location, but they typically stick to what they know best. Our hypothetical Really Smart Acquisition Company is what’s better known as a SPAC. And certain SPACs make for fantastic opportunities for individual investors... The graphic on the right shows the various sectors for SPACs over the past few years. As you can
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June 2021
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