What is a reverse merger? Answer from Investopedia
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Posted On: 04/23/2017 1:35:32 PM
What is a reverse merger? Answer from Investopedia.
"In a reverse merger, investors of the private company acquire a majority of the shares of the public shell company, which is then merged with the purchasing entity. Investment banks and financial institutions typically use shell companies as vehicles to complete these deals. These relatively simple shell companies can be registered with the SEC on the front end (prior to the deal), making the registration process relatively straightforward and less expensive. To consummate the deal, the private company trades shares with the public shell in exchange for the shell's stock, transforming the acquirer into a public company.
Reverse mergers allow a private company to become public without raising capital, which considerably simplifies the process. While conventional IPOs can take months (even over a calendar year) to materialize, reverse mergers can take only a few weeks to complete (in some cases, in as little as 30 days). This saves management a lot of time and energy, ensuring that there is sufficient time devoted to running the company."
"In a reverse merger, investors of the private company acquire a majority of the shares of the public shell company, which is then merged with the purchasing entity. Investment banks and financial institutions typically use shell companies as vehicles to complete these deals. These relatively simple shell companies can be registered with the SEC on the front end (prior to the deal), making the registration process relatively straightforward and less expensive. To consummate the deal, the private company trades shares with the public shell in exchange for the shell's stock, transforming the acquirer into a public company.
Reverse mergers allow a private company to become public without raising capital, which considerably simplifies the process. While conventional IPOs can take months (even over a calendar year) to materialize, reverse mergers can take only a few weeks to complete (in some cases, in as little as 30 days). This saves management a lot of time and energy, ensuring that there is sufficient time devoted to running the company."
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A very apposite motto for those who trade successfully in the OTC market..
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A very apposite motto for those who trade successfully in the OTC market..
All posts are my opinion - trade at your own risk.
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