ActiveAllocator Research – The Wall Street Journal Friday, July 10, BI article ” ‘Blank Check’ IPO Brings Ackman Back on Stage”. Here is what a simple SPAC may look like. It can even have variants to bring in elements of a tontine.
A Bloomberg article suggests that ” — Pershing Square Tontine Holdings Ltd. — will reward investors who hang on to their shares after an acquisition is selected by giving them a fixed number of warrants. When shareholders cash out, those who remain receive more warrants, giving them an incentive to stay.”
Here the analogy is to mortality. When shareholders cash out, the economic effect is similar to mortality in insurance. In this variant the remaining shareholders receive those residual warrants and their payoff will increase – hence perhaps the term tontine in the SPAC vehicle.