What differentiates an APO from a reverse merger is the simultaneous PIPE raise.  A PIPE is when a publicly traded company sells its stock to investors in a privately negotiated transaction.  The stock is normally sold at a discount to current market value and investors are normally acquiring unregistered “restricted” stock.  The typical PIPE investor is an institutional investor such as a hedge fund or mutual fund.  Investment banks or licensed broker dealers act as the “Placement Agent” in the PIPE transaction.

An APO is a quick transaction when compared to an Initial Public Offering (“IPO”).  At the closing of an APO, the public shell and private company sign merger documents and the attorney’s complete the reverse merger; file a Super 8K with the Securities and Exchange Commission (The “SEC”) within four business days, which is the required public disclosure of transaction.  The attorney will also file a registration statement with the SEC to register the PIPE shares; release PIPE funds from escrow; and issue a press release announcing the completion of the transaction.  The company’s stock now begins trading on the OTCBB under its new name, reflecting the new valuation.

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Other posts of the serie

  1. Alternative Public Offering – Part 1 - May 5, 2009
  2. Alternative Public Offering – Part 2 - May 6, 2009
  3. Alternative Public Offering – Part 3 - May 7, 2009
  4. Alternative Public Offering – Part 4 - May 8, 2009
  5. Alternative Public Offering – Part 5 - May 12, 2009
  6. Alternative Public Offering – Part 6 - May 13, 2009
  7. Alternative Public Offering – Part 7 - May 14, 2009
  8. Alternative Public Offering – Part 8 (This post) - May 15, 2009
  9. Alternative Public Offering – Part 9 - May 16, 2009
  10. Alternative Public Offering – Part 10 - May 18, 2009
  11. Alternative Public Offering – Part 11 - May 19, 2009
  12. Alternative Public Offering – Part 12 - May 20, 2009
  13. Alternative Public Offering – Part 13 - May 21, 2009
  14. Alternative Public Offering – Part 14 - May 22, 2009
  15. Alternative Public Offering – Part 15 - May 25, 2009
  16. Alternative Public Offering – Part 16 - May 26, 2009
  17. Alternative Public Offering – Part 17 - May 27, 2009
  18. Alternative Public Offering – Part 18 - May 28, 2009
  19. Alternative Public Offering – Part 19 - May 29, 2009
  20. Alternative Public Offering – Part 20 - May 30, 2009