While I certainly enjoy a good Netflix binge, occasionally, I feel the need to watch something educative. This is how I ended up watching “The China Hustle.” This documentary taught me that between 2008–2016 there was a real boom of Chinese companies that went public in the US via a reverse merger. Many of these companies turned out to be a scam.5 years later and reverse mergers continue being popular. The easiest way to conduct a reverse merger is by the creation of a Special Purpose Acquisition Company (SPAC). If you’ve recently come across that acronym, that’s probably due to their increased popularity. SPACs are en vogue with celebrities like Shaquille O’Neal or Paul Ryan (former speaker of the House)starting their own.We’re barely 2 months into 2021 and SPACs have already raised $40 Billion. But how do SPACs operate and what are they good for?How do SPACs work?SPACs — are also known as “blank check companies.” They raise money through an IPO from private equity firms as well as retail investors.As the name of the SPAC suggests, a SPAC needs to acquire another company and has 2 years to do so. When going public, SPACs won’t usually disclose too much information regarding what company they’re looking to acquire. Reasons for that include avoiding unwanted scrutiny and keeping all options open. Sometimes, SPAC issuers will announce an industry they’re targeting, yet there is no guarantee they’ll go through with it.SPACs don’t have commercial operations. However, they’re allowed to use some of the interest earned on money collected by their shareholders.If a SPAC fails to find a company to acquire within the 2 years time-frame, they’ll return the money to their investors.As soon as a target company is identified, it’ll be publicly announced, and the SPAC will hold a proxy vote in…