Blank-Check Company

AAA

DEFINITION of 'Blank-Check Company'

A company in a developmental stage that either doesn't have an established business plan or has a business plan that revolves around a merger or acquisition with another firm.

INVESTOPEDIA EXPLAINS 'Blank-Check Company'

These companies are generally speculative in nature and will issue penny stock in order to finance future operations.

According the Securities Act of 1933 (under Rule 419), blank-check companies are required to disclose the terms and conditions of their offering as well as place any funds received from the offering into an escrow account.

RELATED TERMS
  1. Acquisition

    A corporate action in which a company buys most, if not all, ...
  2. Blank Endorsement

    A signature by the creator of an instrument, such as a check, ...
  3. Penny Stock

    A stock that trades at a relatively low price and market capitalization, ...
  4. Blank Check Preferred Stock

    A method companies use to simplify the process of creating new ...
  5. Escrow

    A financial instrument held by a third party on behalf of the ...
  6. Merger

    The combining of two or more companies, generally by offering ...
RELATED FAQS
  1. What is a blank-check company?

    A blank-check company is a development-stage company that either does not have an established business plan or its business ... Read Full Answer >>
  2. Why are the terms 'merger' and 'acquisition' always used together if they describe ...

    The terms "merger" and "acquisition" are used together because they both describe processes by which two companies become ... Read Full Answer >>
  3. What level of mergers and acquisitions is common in the chemical sector?

    The level of mergers and acquisitions (M&As) in the chemicals sector has surged to an all-time high since the turn of ... Read Full Answer >>
  4. How can a company buy back shares to fend off a hostile takeover?

    There are several reasons why a company may choose to repurchase some or all of the outstanding shares of its stock. This ... Read Full Answer >>
  5. How does the level of mergers and takeovers in the Internet sector compare to the ...

    The level of mergers and takeovers in the Internet sector is higher than in the broader market. The Internet sector contains ... Read Full Answer >>
  6. What business structures expose entrepreneurs to unlimited liability?

    A company that seeks to expand through a horizontal integration can achieve economies of scale, economies of scope, increased ... Read Full Answer >>
Related Articles
  1. Investing Basics

    The Lowdown On Penny Stocks

    Think penny stocks will make you rich? If you don't understand the risks, you could end up penniless.
  2. Investing

    SPACs Raise Corporate Capital

    These public shell companies hold many advantages over private equity. Find out more here.
  3. Options & Futures

    The Basics Of Mergers And Acquisitions

    Learn what corporate restructuring is, why companies do it and why it sometimes doesn't work.
  4. Investing

    The Risks & Rewards of Penny Stocks

    Penny stocks can make you a lot of money in a short period of time, but this is a very dangerous game that almost always will leads to losses.
  5. Fundamental Analysis

    Is it Wise to Diversify with Small-Caps?

    Historically, it's always been a good idea to add small-caps to your portfolio. But doing so right now will require more focus and attention.
  6. Investing

    Top Alternatives to Penny Stocks

    Have the stomach for high risk? Consider these alternatives to penny stocks.
  7. Investing

    Penny Stocks that Had Potential But Failed

    Welcome to the wild world of penny stocks. Here's what to expect.
  8. Investing

    American Airlines & US Airways Merger: It Matters!

    While the two airlines' merger creates a new giant in the industry and reduces choice for consumers and employees, investors should benefit.
  9. Economics

    What is a Management Buyout?

    A management buyout, or MBO, is a transaction where a company's management team purchases the assets and operations of the business they manage.
  10. Options & Futures

    Key Factors Of The Russell 2000 Index

    The Russell 2000 index represents the small cap universe, with a broad selection of fast growth companies at the bottom end of the capitalization spectrum.

You May Also Like

Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  3. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  4. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
  5. Rule Of 70

    A way to estimate the number of years it takes for a certain variable to double. The rule of 70 states that in order to estimate ...
  6. Risk Premium

    The return in excess of the risk-free rate of return that an investment is expected to yield. An asset's risk premium is ...
Trading Center