Reverse Mergers

 

What Is A Reverse Merger?

A reverse merger is a transaction in which an existing public reporting company, with few or no operations, acquires a private operating company — usually one that is seeking access 
to funding in the U.S.capital markets. Typically, the shareholders of the private operating company exchange their shares for a large majority of the shares
 of the public company. Although the public company survives the merger, the private operating company’s shareholders gain a controlling interest in the voting power and outstanding shares of stock of the public company. Also typically, the private operating company’s management takes over the Board of Directors and management of the public company. The assets and business operations of the post-merger surviving public company are primarily, if not solely, those of the former private operating company.

Why A Reverse Merger?

A private operating company may pursue a reverse merger in order to facilitate its access to the capital markets, including the liquidity that comes with having its stock quoted on a market or listed on an exchange. Private operating companies generally have access only to private forms of equity, while public companies potentially have access to funding from a broader pool of investors.
A reverse merger often is perceived to be a quicker and cheaper method of “going public” than an initial public offering (IPO). The legal and accounting fees associated with a reverse merger tend to be lower than for an IPO; there are no registration requirements under the Securities Act of 1933 as there would be for an IPO and being public may give a company increased value in the eyes of potential acquirers.

What Are Some Advantages Of A Reverse Merger?

A reverse merger offers numerous advantages including (1) initial costs are much lower than an IPO; (2) reduced time for becoming a public company; (3) no significant regulatory review or approval for the transaction: (4) the company can now use its stock as part of its capital acquisition strategy or to finance acquisitions; and, (5) capital may be easier to raise as investors now have a clearly defined liquidity (exit) strategy through the public markets.

Can I Trade Stock In A Company Following A Reverse Merger?

Shares of reverse merger companies may be traded in exchange markets (ex., NASDAQ) or over-the-counter (OTC). If the reverse merger company’s securities are listed and traded on an exchange, the listed company must meet the exchange’s initial listing standards to be eligible for listing. The listed company must also satisfy the exchange’s maintenance or continued listing standards to remain listed and must comply with the rules of the exchange, the federal securities laws and other applicable provisions of the law. When certain market or company events occur, an exchange may halt trading in the securities of a listed company. Also, if a listed company fails to meet the exchange’s continued listing standards, the exchange may initiate proceedings to delist that company’s securities from its marketplace. There is no assurance that a security listed on an exchange will remain so and trade on that exchange indefinitely.

What Is Your Experience With Reverse Mergers?

Our team has over 75 years of combined experience with reverse merger transactions having taken 150+ companies public via reverse mergers which has created more than $5B in shareholder value. Working with the private company, we help them navigate the market for high quality public companies, the security laws for acquiring the public company and SEC compliance post-reverse merger. And, with our inventory of high quality public companies, we’re confident we’ll have a company that will meet your goals and objectives and budget for your reverse merger.

Do You Have An Inventory Of High Quality Public Companies Ideal For A Reverse Merger?

We maintain an active inventory of high quality, public companies ideally suited for a Reverse Merger. For example: 

I. Non-shell Comes With Non-shell Legal Opinion

Actively trading OTC, revenue generating company with existing business; S-1 in 2016; all filings current; DTC eligible; no legal/regulatory issues; features convertible preferred shares and convertible debt; 35 shares holders of record; Common shares: 475m authorized, 67.375m i/o; Preferred Shares authorized 25m, 2.7m i/o; float 5.375m; high delivery.

II. Non-shell Comes With Non-shell Legal Opinion

OTC Pink Current Information Nevada corporation actively trading (bid $1.00/ask $2.25); S-1; DTC eligible; all filings current; DTC eligible; no legal/regulatory issues; 28 shareholders; authorized Common shares 75m, i/o 2.02m; float 520k; 97% delivery; delivered 0-assets, 0-liabilities.

III. SEC Reporting Pink

Nevada corporation featuring up to 98% delivery; common authorized 190m, i/o 47m, restricted 44.970; can deliver up to 97% of restricted shares; free trading 2.030 (no f/t delivered); 86 shareholders; all filings current; no legal/regulatory issues; audited thru 12/31/2018; SEC registered TA; DTC eligible.

Like any other endeavor, there are good ways and bad ways to go about identifying and procuring the public company for your reverse merger. By working with experienced and competent advisors, the acquisition of and reverse merger into a public company can be a lot less arduous and far more rewarding both emotionally and financially. If you’re interested in acquiring a public company for your reverse merger, and seek the assistance of a team highly experienced and qualified in process from acquisition to completion of the reverse merger … and beyond, be sure to contact us.

 

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 Our SEC compliant documents and other services are not a substitute for the advice of legal counsel.