InvestorsHub Logo
Post# of 100910
Next 10

MWM

Followers 1062
Posts 141568
Boards Moderated 14
Alias Born 03/31/2006

MWM

Re: PDC ™ post# 12564

Wednesday, 11/01/2006 12:14:12 PM

Wednesday, November 01, 2006 12:14:12 PM

Post# of 100910
Maybe we should put this up in the Ibox for some of the newbies out there...

A "Reverse Merger" is a method by which a private company can go public by merging with a public company. In a reverse merger a private company merges with a public company that usually has no assets or liabilities. The public company in most reverse merger scenarios is usually referred to as a "trading shell company".

After the reverse merger the private company would retain most of the public companies shares and would be trading under the name of the private company prior to the merger. The board members of the trading shell company would resign and the private company would appoint their own board of directors.

The biggest advantage of a private company doing a reverse merger with a public company is the time it takes to get to public markets. If a private company goes public by way of a reverse merger they can do so in usually two weeks versus up to a year or more from scratch.

Reverse Merger Facts

Nearly half of the companies trading on a small cap exchange went public by way of a reverse merger.
Most private companies that go public by way of a reverse merger experience higher evaluations once public.
Most private companies have an easier time raising capital after going public due to shareholder liquidity and reporting requirements.
Ted Turner did a reverse merger with Rice Broadcasting Inc. which became Turner Broadcasting Inc.
Blockbuster Video went public by way of a reverse merger.

Join the InvestorsHub Community

Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.