In the past several months there has been an extraordinary surge in initial public offering filings for so-called blank check companies. Blank check companies (also called “special purpose acquisition companies” or SPACs) represent an alternative way for investors to invest and deploy capital in search of strong returns while minimizing risk along the way.

SPACs are holding companies that are created, and listed through an initial public offering, with the sole purpose of finding a company to buy. Because SPACs have no assets, liabilities, revenues, management or corporate history, they have very little risk and effectively act as a public company platform for the target company (or companies) that are acquired by the SPAC.

From the point of view of the sponsoring management team that forms the SPAC, the SPAC is a vehicle to undertake acquisitions that are underwritten, at least in part, by the public shareholders of the SPAC. From the point of view of the public company investors, the SPAC makes it possible for the investors to invest in the returns that can be unlocked when a private company is brought onto the public securities market.