Posted in Finance, Accounting and Economics Terms, Total Reads: 105
Definition: Blind Pool
A blind pool is the strategy adopted by the companies generally by startups in which owners do not specify where the investors’ money will be spent or utilized. There is high risk involved for the investors in such investment because they are not aware of where and in which activity there investments will be utilized by the company. The Blind pools does not have a good reputation in the financial markets as the consequence of some frauds resulting between 1980s and 1990s and hence Blind pools is not considered as a good strategy to fund the capital requirement of the company and the investors had to trust blindly in the company using Blind pool strategy in raising funds .
Blind pool is usually practiced in case of reverse take overs and acquisitions where a private company acquires a public company to skip the lengthy and complex process of merger and acquisition. In this case the acquiring company do not require to issue IPO and use the fund collected through Blind pool to acquire the public company.