Everything you need to know about Reverse Shell Mergers by Ralph Amato
There are certain steps that must be taken when a company is anticipating purchasing an OTCBB shell for the purposes of going public. For purposes of this discussion we will assume the “Company” has performed its due diligence and is aware of the pros and cons of going public through a reverse shell merger. However, [...]
DUE DILIGENCE
The most important aspect of buying a shell is performing your due diligence. If you have retained a savvy business consultant he will comb through all of the previous filings of the shell under consideration. He will be able to identify who are the major shareholders, the number of authorized and outstanding [...]
Shell Criteria
The third area to address when purchasing an OTCBB shell is the shell itself. Shells come in many different variations and there are certain nuances to the transaction that Buyers must become familiar with.
First of all you need to define the criteria for the purchase of the shell. Some shells can deliver [...]
When you start to look at different shells to purchase you will receive a Corporate Shell Profile that will list all of the pertinent data of the Shell. What is most important in your search is that you locate a “clean shell”. A clean shell is one that can be delivered free of any liabilities, [...]
Reviewing the Financials
One of the first items on your due diligence list is to check the financials of the shell you are seeking to purchase. The financials listed below are for Shell Profile #2 that was outlined in Part 4 of this series.
The assets of Shell #2 are minimal so there will be no problem [...]
The Due Diligence Information Request
A good Consultant will have a Due Diligence Information Request form for the Seller to fill out. This laundry list will cover the list of documents that the Buyers attorney is sure to ask for. Ventana Capital Partners uses an eleven page request form. The document request is [...]
LOI
The Letter of Intent (the “LOI”) sets forth certain understandings and agreements between the Buyer and Seller. The LOI is usually in the form of a Stock Purchase Agreement. The LOI will sets out the key terms of the acquisition of the Shares by the Buyer. The parties agree to negotiate and [...]
The Definitive Agreements
The Definitive Agreements address all of the areas that must be addressed and satisfied prior to closing. There are a multitude of agreements that must be prepared prior to closing. The agreements vary according to transaction. However, there are a number of items that must be addressed in the Definitive [...]
Conditions for Closing on the Shell
I have listed some of the requirements necessary when closing on a Reverse Shell Merger.
Sufficient information to complete and file the required 8-K with the SEC.
Management information, including completion of the “Officer and Director Questionnaire,” for all Officers and Directors of the private company merging into the shell.
Buyer and Seller [...]
One of the key elements of the Definitive Agreements is the Stock Purchase Agreement. I have listed below an example of an agreement that could be used in the transaction:
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this “Agreement”) is made this March 10, 2007 by and among each of the parties set forth on Schedule [...]
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