Going Public Through a Reverse Merger

Going Public Through a Reverse Merger

A Reverse Merger may be the quickest way to go public but is it the best? We look at a few drawbacks of using a reverse merger to take your company public.

For many business owners, the transition from a private company to a publicly-traded corporation is just out of reach.

An IPO is a daunting process, and the combination of limited resources and limited expertise can intimidate even the hardiest entrepreneurs. But what if there was a way to take your company public without the hassle and expense of an IPO?

The idea of circumventing the usual IPO process sounds like it should be illegal, unethical, or both. However a reverse merger provides a shortcut that is both legal and logical. Although it may seem complicated, a reverse merger can be a lot easier than you think. Here's what you need to know:

What is a reverse merger?

In its simplest form, a reverse merger is when a smaller company takes over a larger one for the benefit of becoming a publicly-traded corporation. Usually, the publicly traded corporation is known as a "shell corporation" because it has little or no assets. Even though it continues to be a publicly traded corporation, its assets have evaporated through bankruptcy or liquidation and now all that remains is its internal structure and shareholders. The private company obtains the shell company by purchasing controlling interest through a new issue of stock.

Typically, the new, merged company will take the name of the private company, installing a new board of directors and corporate officers. At that point, the merged corporation files a few forms with securities regulators and works to maintain the minimum number of shareholders required for inclusion in stock exchanges.

What are the benefits of a reverse merger?

The benefits of a reverse merger are fairly obvious. From the private company's perspective, a reverse merger eliminates the expense of an IPO as well as the time and hassle involved with making the transition to a public entity. The time factor should also be taken into consideration since a reverse merger will usually allow you to make the transition more quickly than an IPO.

Are there any drawbacks to doing a reverse merger?

Unfortunately there can be some drawbacks involved in using a reverse merger as a tool for taking your company public. The first may be the cost of the shell company itself. As more people have become aware of the benefits of reverse mergers, the cost of shell companies has risen sharply. It's possible that you could end up spending $300,000 or more in a reverse merger scenario and the owner of the shell company could retain a percentage of ownership in the new company.

Additionally,if the shell in a reverse merger is not new and clean it could involve the same risks you would incur in buying any business. Pending litigation, hidden debts, and inaccurate reporting can all come back to bite you if you fail to perform adequate due diligence. It is especially worthwhile to explore the reasons why the shell company went out of business in the first place. If the issues aren't resolved or haven't been explained to your satisfaction, you're probably better off moving on to another candidate.

Best is always getting a clean shell that has never traded. Merger Law Associates are specialists in creating clean shell companies.

visit www.mergerlawassociates.com for more information on going public

Merger Law Associates Ltd: Take your company public

Merger Law Associates Limited - Listing On Frankfurt Stock Exchange


Direct Listing (Primary Listing)
Whether your company is a German corporation or an Australian, Indian, Canadian, US, UK, Chinese or any other corporate jurisdiction, we can list your company on the Frankfurt Stock Exchange on the First Quotation Board, Entry Standard, General Standard, or Prime Standard segment. You do not have to be trading on any other exchange to float on the Frankfurt Stock Exchange. We take care of everything needed for your public listing, including preparation of a custom prospectus and BaFin approval (required only for the Regulated Markets). Merger Law Associates Limited shall be your central point of contact from beginning to completion of your Frankfurt Stock Exchange listing. A listing on the Frankfurt Stock Exchange is much faster than any other exchange in the world. The entire process only takes approximately 4 to 6 weeks. Reverse Merger with a Frankfurt Public Shell:
Our public shell companies are all brand new companies trading on the Frankfurt Stock Exchange. Any country in the world can merge with Frankfurt Stock Exchange public shell company, and in that way, become publicly traded on the exchange. When you merge with an already public trading company, you do not have to meet any of the normal requirements because the public shell company has already met those requirements. Moreover, everything a public company needs, such as the market maker, paying agent bank, transfer agents, etc., are already in place, so nothing more is needed after the merger. When you purchase a public company shell through us, the costs are all-inclusive for you including but not limited to the due diligence, purchase agreements, name change, symbol change, initial press release assistance, and more. The merger process is extremely simple, and only about one week. All legal costs for the merger details are included in the cost of the shells we present. Dual Listings (Secondary Listing)
If your company is already trading on an approved "Like Exchange" foreign stock exchange (there are over 200 approved "Like Exchanges"), we can dual list your company on the Frankfurt Stock Exchange quickly and affordably. For more information, go to www.mergerlawassociates.com Other IPO Services & Information

Frankfurt Stock Exchange Shells for Sale
Global Depository Receipts (GDRs)

Indian Company Frankfurt Listings

Chinese Company Frankfurt Listings

Frankfurt Stock Exchange Listing Requirements

Prospectus Preparation and BaFin Approval

Frankfurt Stock Exchange IR/PR Services

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