Everything you need to know about Reverse Shell Mergers by Ralph Amato
Some venture capitalists (“VC”) believe that their traditional industry model needs to be revised. That is why we are starting to see more and more companies being funded in the “BRIC” countries (Brazil, Russia, India and China). The days of sitting back and waiting for companies to come to you for funding is [...]
In contrast the differences in investing in a US based company versus a foreign company are significant. US based companies get higher valuations and in some ways have less risk. Companies have a greater awareness of SEC and SOX compliance and understand the importance of keeping their investors informed.
Foreign companies have greater risk associated with [...]
There are several other areas of concern that US investors must address when investing in foreign companies. This can include but not limited to release of funds from escrow in traunches based upon the company’s use of proceeds. Other conditions usually contain a provision for Officers and Directors shares to be held in escrow until [...]
Other terms and conditions for investment in a foreign company can include prepayment of the first year’s attorney, accountant and consultants fees along with $500,000 for investment awareness programs with a “use it or lose it” clause. Terms and conditions can also include a clause that prevents a change in the CFO position within the [...]
Because of the cultural differences and risk factors associated with foreign deals it is not uncommon for US based investors to dictate certain terms and conditions that are unique to these types of investment. One of the biggest areas of concern is investor awareness. For some reason certain countries, like China, do not understand why [...]
Foreign deals are valued differently than US deals. The goal for the foreign company is not to get listed on the OTCBB but to gain listing on an exchange like AMEX or NASDAQ. To do this they have to demonstrate earnings of $.30 to $.40 a share so they can eventually get their stock to [...]
Investment in a foreign company is treated in a much different manner. This is due the inherent risk factors. Investors are keenly aware they have little recourse if a foreign company does not perform. Most of these emerging growth companies are located in BRIC (Brazil, Russia, India, China) countries. Those countries do not have an [...]
There terms and conditions of financing a US based versus foreign company are as different as night and day. Most US based companies have a tendency to give their companies much higher valuations than they deserve. Investors are usually split into two camps. Either they want a company that has revenues, profits and large growth [...]
The thought processes of going public through a reverse merger are quite different for foreign companies versus their US counterparts. Consideration of revenues and profits of foreign companies differ greatly from the investor’s point of view. Most foreign companies will not try to attempt a reverse merger or financing unless they have a minimum of [...]
There are many cultural differences between US investors and management of foreign companies. US investors have certain expectations when they make an investment in a company, regardless whether it is foreign or domestic. In most cases they expect a substantial ROI in less than 24 months. US investors want to see returns as soon as [...]
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