Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

Welcome back to Patrick Boyle on finance. So today's podcast is the first one of my podcasts

that's just produced for a podcast audience rather than overlapping with

my YouTube channel. It's maybe a little bit more long form than is appropriate for YouTube.

But it's based upon a video that I did on the topic of SPACs explaining what SPACs are and how

they work. And after I created that video, I was asked to speak at the Chicago Club to a group of investors.

And this is a recording of that event.

So hopefully my podcast audience will find this both interesting and informative. Okay, well, we'll get going. I guess

the first thing we'll talk about is just even what is a SPAC. And so a SPAC stands for special purpose

acquisition company. And it's an idea that's been around for a very long time. It sort of feels like a

very 2020 thing because it's suddenly been in the news. But it's been around for a very long time. It sort of feels like a very 2020 thing because it's suddenly been in

the news, but it's been around for ages. As someone mentioned earlier, there was a big boom in the

early 80s as well with SPACs. It's also been referred to in the press a little bit as a blank

check company. And the idea is that it's just sort of a corporate shell. It's a company with money in it

that investors put money into that's usually sponsored by a well-known investor because it's kind

of driven by this idea. It's almost like a portfolio manager, like someone who will know

what to do with the money. And it goes public. It has an IPO.

It raises money from investors, but the money just goes into the company. It's just a shell at this

point. And then they search for a private company to merge with. And that merger then means that you

suddenly now own this private company.

So it sort of can be viewed as an alternative to an IPO.

The merger, when it happens, takes the target company public, but it avoids the whole process of an IPO.

...