Introduction Reverse mergers are also commonly referred to as reverse takeovers, or RTO's.
Reverse merger allows your private company to go public.
Reverse's are financial transactions are becoming increasingly popular and accepted.
These mergers are with inactive SEC reporting public companies which usually have no assets or liabilities, no current operating history, and SEC qualified audited financials.
Reverse Reverse Takeovers always come with some history, and some shareholders.
Reverse mergers are especially effective for companies seeking access to the PIPE market, comprised of investors who buy shares in earlier-stage companies only through public vehicles.
Reverse mergers: An alternative to the IPO.
These transactions are usually followed up with a private placement.
There structure is far more versatile than IPOs.
These type of mergers can sometimes be much more effective than doing an IPO for a smaller, privately held company.
Public Public stock can provide a long term exit strategy for the founders.
Public shells are public companies that for a variety of reasons either no longer conduct actual business operations or do not intend to do so in the future.
Public companies are generally perceived as much more attractive investments, with greater overall value, than private companies.
Public companies find it easier to attract investors than private ones do because investments in public companies are more liquid.
Public Company Experience: Having members of management with prior public company experience is important as well as being a big plus.
IPOs IPOs generally require greater attention from top management.
IPOs have become tougher, riskier, and more expensive.
Most investors are familiar with the traditional IPO (initial public offering) as a method for going public.
IPOs, on the other hand, can take an average of 6 to 9 months to complete.
Second, a reverse merger can be completed in as few as 45 days.
Sec Securities and Exchange Commission (SEC) has many rules and regulations that must be complied with.
Second, if you have not started the process of a reverse merger, talk to your attorney about a non underwritten IPO for your company.
Securities broker or dealer may not publish a quotation for any security unless certain information concerning the issuer is available and the broker or dealer has a reasonable basis for believing that the information is accurate.
Conclusion Reverse Merger or a Public Shell Purchase Increased Valuation: Typically publicly traded companies enjoy substantially higher valuations than private companies.
Reverse mergers can be consummated quickly and inexpensively as opposed to the more arduous process of an initial public offering.