Everything you need to know about Reverse Shell Mergers by Ralph Amato
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 [...]
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 [...]
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 [...]
At the conclusion of a successful APO transaction, a company is publicly traded and has received its PIPE (equity) funding and has a combination of individual investors and a base of institutional investors. The company has the sponsorship of an investment bank or broker dealer and working towards an exchange [...]
In comparison to the statistics of the 2007 reverse mergers, www.ipohome.com states that the traditional IPO marketplace in 2007 produced 234 deals with an average deal size of $229MM with aggregate proceeds of $54 billion. This is an 18% increase in the number of deals closed in 2006 and a 6% increase in the [...]
According to www.dealflowmedia.com no individual month witnessed less than double digit deals coming to market; a feat that has not occurred in almost 25 years (1993). The most interesting statistic is that the average reverse merger deal in 2007 was valued at $55.55 million. This is a substantial number for it proves that [...]
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