SPACs, explained

Q: What’s a SPAC?

H.L., Middleton, Idaho

A: The letters stand for “special purpose acquisition company.” While SPACs aren’t new, they’ve become more high-profile in recent years as some major investors and entities have gotten involved in them. In a nutshell, SPACs — sometimes referred to as “blank-check companies” — have no manufacturing or service operations. They are formed in order to hold initial public offerings (IPOs) and collect cash in exchange for their shares; that cash is then used to buy or merge with another company.