In 2019, WeWork was the tech darling of Silicon Valley. Or at least it started the year that way. By the end of it, the company had a very public and dramatic fall—a fall that included abandoning its IPO. But today WeWork announced it is finally moving ahead with previous plans to go public—however, it will do so via a SPAC instead of an IPO, The Wall Street Journal reports.
But what is a SPAC? Its acronym stands for “special purpose acquisition company” and it is basically a shell firm that is already public and listed on a stock exchange. It’s that shell firm that acquires a currently private company, thus taking that private company public in a roundabout way. Or as Don Butler, managing director at Thomvest Ventures, told CrunchBase, “you can think of it like, an IPO is basically a company looking for money, while a SPAC is money looking for a company.”
In WeWork’s case, WeWork is the private company and a firm called BowX Acquisition Corp is the already public company acquiring WeWork via the SPAC. The planned merger between the two companies will value WeWork at around $9 billion, including debt. But while $9 billion is nothing to sneeze at, it’s a far cry from the over $46 billion WeWork was valued at in early 2019 at the height of Silicon Valley’s love affair with the company.