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What are SPAC shares?

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Education
March 15, 2022

Jump to heading What are SPAC shares?

The SPAC's safe trust account is linked to its common stock. SPACs are set up so that each public share has at least $10.00 in the trust account.

In the open market for shares liquidity may be limited, but the specified liquidation term of SPAC common equity might give a relatively attractive return with the possibility to own a SPAC's prospective acquisition target.

All public shares are redeemed if the SPAC fails to carry out an acquisition within the stipulated time frame (usually two years). All public shares are redeemed for a pro rata fraction of the funds retained in the trust account if the SPAC fails to conclude a business combination within the specified period.

Companies usually set a $10 floor on their share price, since it is the amount that must be paid out to shareholders if the firm fails to achieve an agreement.

To learn more about SPACs, check out our other articles.

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