Written by Lalit Janak
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Empeiria Acquisition Corporation is a Special Purpose Acquisition Company (SPAC), which is essentially a blank check company created for the sole purpose of acquiring another company already in operation. Empeiria filed its S-1 (IPO registration) on March 4, 2011, and thus has been in operation for nearly three months. Empeiria has a highly experienced management team led by CEO Alan Menkes, who is also the Managing Partner at G2 Investment Group. 
 
Essentially how a SPAC, and thus Empeiria, works is that it is created only to acquire another company. The SPAC normally has two years to make this acquisition happen. If such an acquisition does not occur within the two year span, then the management team loses their initial investment, but all the other investors get all their money back. From an investor’s perspective, investing in SPACs comes with very low risk. In addition, in the IPO registration of each SPAC, there is a section dedicated to “Proposed Business,” which details what type of target company the SPAC is looking to acquire. Empeiria, for example, would ideally like to acquire an energy, transportation, food, or technology company. However, Empeiria is not limited to such companies and states in the “Proposed Business” section that they will not limit themselves to any industry. Once the business consummation takes place between the SPAC and the target company, the combined company will go public. It is the hope of both the SPAC and investors that once the company goes public, it will  continue to grow and expand. 

This type of blank check company allows for companies to go public in a faster way. SPACs have existed since the 1980s, but briefly went away during the recession two years ago. Now, however, they are making a comeback, and there are currently about 10 SPACs currently looking for a target. SPACs have revolutionized the financial industry and will continue to do so as long as the economy remains healthy.


 


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