It is, more or less, a Blank Check Company. A SPAC usually happens in real life when there's an industry in crisis, or a fractious set of competitors who are all nickel-and-diming each other to death. The SPAC then comes in and, more or less, buys "everyone" in that vertical group or industry, fixes operations a bit, raises prices, and blammo, they're in the black. See: Leveraged Buyout.
A SPAC is usually all equity, then subsequently layers on small amounts of debt. Like...a SPAC is formed to buy small motels all along a newly populous trucking route, delivering battery supplies to the new Tesla Factory. The motels are run-down, crappy, without WiFi, and they need sprucing up. So...for not all that much money, one operator can buy, say, 23 motels all along the same route, fix 'em, and have that excuse to raise prices. Then, subsequently, if they want to buy more motels, they can usually get a line of credit or straight debt, just based on what is likely very positive cash flow from those stayovers.
They'll keep the light on for ya (and charge you for it).
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Finance: What's the difference between m...22 Views
Finance allah shmoop what's the difference between mergers and acquisitions
all right people listen up Merger that's what's about to
happen here it's a merger acquisition that's what's about to
happen here Corporate america is kind of same thing when
two companies merge while they generally you know attracted to
each other hopefully respect each other they share stock or
combined the stocks of each side and you know combine
efforts and then and then cuddle afterwards if they're successful
at the merger than the combination of two roughly equals
yields more than the one plus one combo that made
them so two companies get together on generally equal ish
footing In that case acquisitions are a combining more like
that eating thing on much different footing The large company
eats or buys the target either using its more highly
valued stock currency or it's taft to do so Well
why would a company acquire another Well the target might
have one hundred employees ninety of whom can be fired
with massive expense savings after the acquisition For the acquirer
such that economically the acquisition won't just makes a whole
lot of financial sense acquisitions happen for market power reasons
As well like imagine the negotiating leverage that amazon would
have if it bought the next five biggest online retailers
Or maybe it'll just kill them Probably not legal for
them to buy him anyway given the monopoly like dominance
of amazon these days But wow that would be a
powerful set of acquisitions And that would be a good
reason for ems on to acquire a whole bunch Things
and bezos would grow even more powerful maybe too powerful
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