Advantages of a Reverse Merger

There are several advantages of the reverse merger over a traditional IPO. WE will cover each advantage over the next several Blogs. Let’s start with the most important item to most entrepreneurs:

• Cost – Reverse mergers usually cost significantly less than an IPO. The total cost will be less than $1 million, inclusive of the cost of the shell, financial audits and attorney fees. However there are alternatives that can reduce those fees substantially. If you have a company that is generating revenues and profits and has an intriguing business model you can sometimes attract a shell owner who will, in lieu of receiving cash, take equity participation. This could save you the cash outlay of approximately $500K to $800K to purchase the shell. Ventana Capital Partners specializes in these types of deals. www.ventancaptalpartners.com

An IPO, on the other hand, is much more expensive, costing at least two million dollars before factoring in investment banking fees, underwriting commissions and road shows to raise capital.

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