Everything you need to know about Reverse Shell Mergers by Ralph Amato
In my previous seven part series “Going Public – Do You Know What to Expect” I covered the process of taking your company public through via a traditional IPO. What I mean by “traditional” is an IPO that will be raising a substantial amount of money through an underwriter and will be listed on a [...]
There are several reasons why entrepreneurs desire to take their company public: access to public markets, liquidity for shareholders, increased transparency and the ability to use their stock to acquire other companies and to raise additional capital as needed. Reverse mergers are especially effective for companies seeking to attract top management talent.
Entrepreneurs who take their [...]
Once an entrepreneur decides that the reverse shell merger route is the course to take for their company there are several next steps to consider:
Hire a financial consultant that is experienced in all aspects of reverse shell mergers. The old adage “an ounce of prevention is worth a pound of cure” is especially true when [...]
In years past the SEC expressed a dislike for reverse mergers, particularly those in which a newly formed subsidiary is merged into the private target with the private company surviving as the wholly-owned subsidiary of the public parent. This is not because the structure is inherently poor but because the disclosure framework that existed at [...]
Lets start by saying going public through a reverse merger is no longer looked upon as being a negative. Some of the greatest companies in the US went public using a shell: Berkshire Hathaway, Tandy Corporation, Occidental Petroleum, Blockbuster Entertainment and most recently The New York Stock Exchange.
Reverse mergers are far more versatile than [...]
Advantages of a Reverse Merger
There are several advantages of the reverse merger over a traditional IPO. WE will cover each advantage over the next several Blogs. Let’s start with the most important item to most entrepreneurs:
Cost – Reverse mergers usually cost significantly less than an IPO. The total cost will be [...]
Advantages of a Reverse Merger
Timeliness – The SEC reviews each reverse merger that is filed. If you are performing a reverse merger into a company that is listed as a “shell company” you will need to have your audits finalized before you close on the shell. Why? Because the SEC mandates [...]
Advantages of a Reverse Merger
Market Conditions – Many times management has a “window of opportunity” in which to take their company public. This could be the result of current market conditions or a perception that their company is in a hot industry or they have a product or service that is deemed to [...]
Advantages of a Reverse Merger
Management Time Requirements – There is considerable difference between the amount of time your management team will have to devote to going public through a reverse merger versus going public through a traditional IPO. If you have hired an experienced consultant to source you a qualified OTCBB shell you [...]
Advantages of a Reverse Merger
Finalizing the Reverse Merger – One of the most important issues to understand is, unlike your traditional IPO, management does not have to fear that the reverse merger transaction is going to be cancelled or “withdrawn” by an underwriter. Yes, you may have to deal with SEC comments but [...]
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