"Blank Check" IPOs: What Investors Need to Know

There's been quite a bit of attention this year on "blank check" IPOs. DraftKings (NASDAQ: DKNG) used one to go public. More recently, hedge fund manager Bill Ackman has been in the headlines as his new special purpose acquisition company (SPAC) -- another moniker for these blank check IPOs -- began trading Wednesday. I'm sure many are wondering what these companies really are. 

In the simplest terms, a blank check company is a public entity that doesn't have a purpose or business plan. When it's being used as an instrument for taking a private company public, the blank check company goes public and raises capital. Then it acquires the private business that is meant to become public.

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Source Fool.com