Everything you need to know about Reverse Shell Mergers by Ralph Amato
10. Does that capitalization take into consideration the effects of dilution if you are going to need additional funding?
Dilution occurs when a company issues additional shares. Shares can be issued for a number of reasons: raising capital, services rendered, or stock options for management and employees. But dilution can have a devastating [...]
9. Are you planning on raising a round of financing through a PIPE transaction?
One of most difficult parts of the going public through a reverse merger process is the capital raise. Many of today’s shell financings are done through what is commonly referred to as a PIPE – Private Investment in Public Equity. [...]
8. Have you determined the post effective capitalization of the shell?
This is probably one of the most important decisions you will make as CEO of a public company. How exactly do you value your company? The value you place on your company will determine how you capitalize the company. In other [...]
Do you plan on reversing the shares or forward splitting the shares of the shell you are purchasing?
OTCBB shells are capitalized in many different ways. Even when you buy a shell with a 99% delivery it doesn’t necessarily mean you do not have to perform a reverse or forward split. Let me explain [...]
6. Are there any investors in the float who have a large block of stock?
When you are considering how much of a float you want to remain, you have to consider how many shareholders hold a large block of stock. The best way to determine this is to examine a certified copy of the [...]
How many shares do you want to remain in the float?
This is one of the most interesting topics to discuss because there are varied opinions about how many shares should be left in the float. Once again this depends on the capital structure of the shell you are buying. I have clients who [...]
Is it important that free trading shares from non affiliates be included as part of the shell purchase?
When you are considering the purchase of a shell it is important to assess what your needs are. In many cases your needs will determine the price of your shell. If you are seeking a shell [...]
What percentage of the shares do you need deliverable? Will 51% work or do you need a 99% delivery shell?
The other area to address is what type of shell you need. If you want a shell that delivers 51% of the stock, then you will be on the low side of the pricing model. [...]
Have you considered exchanging equity in lieu of cash for the purchase of the shell?
There are certain sellers of OTCBB shells who prefer to back a substantial new company into their shell rather than sell it for cash. If you have an established company with a history of revenues and earnings along with a [...]
1. Are you going to pay cash for the shell and if so how much have you allocated for that purchase?
OTCBB shells are priced from $500,000 to as much as $900,000. You are probably asking yourself why there is such a huge pricing disparity. The reason is [...]
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