https://www.bloomberg.com/opinion/articles/2021-01-08/spac-m...

Here's the high-level summary from that article, though there's a lot more detail that's worth digging into:

> Here’s how a SPAC works:

1. You give me $10.

2. I put your $10 in a pool with a bunch of other people’s $10, held in a trust account at a bank.

3. I give you back one share in the pool (representing $10 of money in the pool), and one-quarter of a warrant to buy another share for $11.50. (The combination of the share and part of a warrant is sometimes called a “unit.”)

4. I try to find a company to take public within two years.

5. If I fail, I give you back your $10 with interest.

6. If I succeed, I merge the pool with the company, giving the company the money in the pool and giving you and your fellow shareholders shares (and warrants) in the new combined company. Also I get a bunch of shares and warrants in the combined company, as a reward for my work.

7. When I do this, I give you the choice to either (a) let your money ride and take a share in the new company or (b) get your $10 back, with interest.