Glossary

Acquisition target The SPAC sponsor identifies a private company, or acquisition target, for the SPAC.
Blank check company SPACs are sometimes called “blank check companies,” because SPAC investors buy shares without knowing the private company that will be acquired.
Business combination The SPAC sponsor announces an initial business combination after the acquisition target has been identified and due diligence has been performed.
Carry For bonds, carry is the coupon on the bonds minus the interest costs of short-term borrowing. For equities, carry is the dividend yield minus the interest costs of short-term borrowing.
Correlation Correlation is a statistical association that describes how two variables move in concert with each other. Positive correlation means the two variables move in the same direction. Negative correlation means the two variables move in opposite directions. Zero correlation means the two variables move independently to each other.
De-SPACing The process of “de-SPACing” occurs once the business combination has been finalized. The SPAC no longer exists.
Russell 2000 The Russell 2000 index measures the performance of the 2,000 smaller companies that are included in the Russell 3000 Index, which itself is made up of nearly all U.S. stocks.
SPAC A Special Purpose Acquisition Company, also known as a blank check company, is a company formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring (or merging with) one or more existing private companies.
S&P 500 S&P 500® Index: (registered trademark of The McGraw-Hill Companies, Inc.) is an unmanaged index of 500 common stocks primarily traded on the New York Stock Exchange, weighted by market capitalization. Index performance includes the reinvestment of dividends and capital gains.
SPAC units, shares & warrants SPAC units are offered at the time of the IPO. A unit consists of a share of common stock and a (portion of a) warrant. Beginning approximately 50 days after IPO, the common stock and warrants may be bought and sold separately.
Sponsor The management company that forms the SPAC and bears offering expenses is the sponsor. Sponsors commonly receive founders shares.
Trust account Cash raised by a SPAC is held in a trust account, and generally invested in relatively safe interest-bearing instruments, until a business is acquired, or the SPAC is liquidated without an acquisition and the money is returned to investors.
Warrant A warrant gives the holder the right to purchase a specific number of shares of common stock at a specific price during a specific period of time.