Everything you need to know about Reverse Shell Mergers by Ralph Amato
Why IPO’s are Disappearing
As you look closer at the IPO landscape it becomes more and more evident why they are becoming a dying breed. First of all the regulatory process that a company must go through to become a public company is antiquated. All of the SEC rules and regulations were [...]
Why APO’s are replacing IPO’s
There are several reasons why APO’s are becoming the defacto IPO marketplace. Firm commitment underwritings (IPO funding guaranteed by the underwriter) have gone the way of the dinosaur. All of the tier one underwriters such as Merrill Lynch, Citigroup, JP Morgan, etc., were either acquired or decided [...]
PIPE investors have funded APO’s because they get to buy stock at discount to the projected public market value of a company. Additionally they know that because the company completed a reverse merger and is now public there is a guaranteed exit strategy. Many tier 1 hedge funds are active investors [...]
With an APO, the investment bank determines the value and likelihood of success in the marketplace for a company before it decides to fund it. This is why the APO has such a high success rate. The investment bank can also bring research reports, trading and liquidity to the company’s stock [...]
PIPE investors have funded APO’s because they get to buy stock at a discount to the projected public market value of a company. Additionally they know that because the company completed a reverse merger and is now public there is a guaranteed exit strategy. Many tier 1 hedge funds are active [...]
With an APO, the investment bank determines the value and likelihood of success in the marketplace for a company before it decides to fund it. This is why the APO has such a high success rate. The investment bank can also bring research reports, trading and liquidity to the company’s stock [...]
The difference between APO model and the reverse merger is that the APO includes a funding at the time the transaction closes. Therefore much of the APO’s success is due to the involvement of the Investment Bank as the funding source and gatekeeper that standalone reverse mergers do not possess.
In [...]
With an IPO a company must publicly announce its intentions and file with the SEC at the beginning of the process and before it can file it must have its books audited by an SEC sanctioned CPA firm. The initial audit process of the last two years of the company’s books [...]
As we have mentioned previously underwriters are few and far between so finding broker dealers to participate in your IPO would be extremely difficult in this financial environment. Unlike an IPO, there is no public disclosure required with the APO or reverse merger until the transaction closes. No one is aware [...]
Benefits of the APO or Reverse Merger
Companies want to become public through an APO or reverse merger for several reasons. The public shell company provides an established base of shareholders, usually somewhere between 50 to 100 individuals. This enables the formerly private company that has reversed into the shell to qualify [...]
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