Everything you need to know about Reverse Shell Mergers by Ralph Amato
Most foreign companies have grown organically and originate from countries that have not established financial markets and therefore there is no access to capital. These companies are patient and have bootstrapped their way to success by growing their companies through internal cash flow over several years. So their success comes at a great price and [...]
I am contacted by entrepreneurs that inquire about purchasing an OTCBB shell for a reverse merger for their company. In many cases, after an initial discussion, it becomes obvious an alternative course of action would be best suited for reaching their goals and taking their company public. One of those alternative options is a Direct [...]
CHINESE Reverse Mergers for 2007
China’s State Administration of Foreign Exchange issued a rule entitled Circular 106 which went into effect in the summer of 2007. The new rule required Chinese companies that set up offshore entities for domestic investment to receive approval from Chinese regulators prior to establishing such offshore jurisdiction. At first it was [...]
The fourth quarter of 2007 was the busiest season for reverse mergers. There were 71 deals brought to market but the average market cap per deal dropped 16% from the previous quarter to $37.3 million. We have also seen greater participation of foreign companies using reverse mergers to get their companies listed in the US [...]
Shell mergers increased by 5% in 2007 to 222 completed transactions. Collectively, reverse mergers for 2007 were valued at $8.36 billion, a 14% increase over the previous year. It is this writer’s opinion that once you have read my series on the Shell Mergers for 2007 you will come to the same conclusion I have: [...]
Promoting Your New Public Company
This is a great time for the Buyer to start getting the word out to the investing public about their company. The best way to do this is to hire an investor relations (“IR”) or public relations (“PR”) professional. Personally, I prefer the PR route versus the IR.
Investor Relations Firms
There are [...]
Post Closing of the OTCBB Shell
After the Buyer has closed on the shell an 8K (or super 8K as previously discussed) will be filed with the SEC by counsel. If the Buyer is performing a reverse split of the stock along with the reverse merger then counsel will also be filing either an Information or [...]
Closing on the Shell
Upon the closing of the shell the Buyers SEC attorney will have received all of the due diligence on the shell. The attorney will have also received all of the stock certificates with signed stock powers (usually with gold medallion guaranteed signatures) from all of the Sellers.
The escrow agent releases the funds [...]
Examination of Shell Due Diligence by Buyer
Examination of the shells due diligence is where the rubber meets the road. This is the point that determines whether you are going to proceed with the transaction or reject the shell. Your SEC attorney will perform a complete due diligence review. If you have hired [...]
By Ralph Amato
Preparation of Shell Due Diligence by Seller
After your initial review of the shell you and your SEC attorney will perform a complete due diligence review. For Ventana Capital Partners clients we use a ten page due diligence questionnaire that we have the Seller complete before we ever approach a Buyer. We [...]
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