There are many advantages of reverse mergers. Typically publicly traded companies enjoy substantially higher valuations than private companies. Raising capital is usually easier with reverse mergers because of the added liquidity for the investors, and it often takes less time and expense to complete an offering. Making acquisitions with public stock is often easier and less expensive, and stock options or stock incentives can be useful in attracting management and retaining valuable employees. The costs of reverse mergers are significantly less than the costs required for an initial public offering. There is less dilution of ownership control, compared to a traditional IPO. And no underwriter is needed for reverse mergers to happen.
A public shell company is normally valued higher than a private one. Founders of a public shell company suffer less stock dilution when raising capital, and making acquisitions with stock is easier and less expensive. Stock and stock options are useful in attracting management. Management and employee stock options in a public shell company have more value. There is more liquidity for founders, minority shareholders, and investors. This stock is often easier to use in estate planning for the principals. It can provide a long term exit strategy for the founders. You can often consult with a securities law firms or CPA to locate a public shell company.
A non-trading non-reporting public shell normally only a shareholder base. It may or may not have been a reporting company. This type of public shell has no symbol and must file with SEC full business information and audits to become reporting. Market maker must file a new 15c211 with the NASD to get symbol. This type of public shell is least attractive. A reporting non-trading 12G company, normally just files a blank 10k with no business. It usually has one shareholder and no active market maker. It usually has no symbol, or an inactive symbol. The market maker must file a new 15c211 with the NASD to get a symbol. A shareholder base of 50 or more is necessary for the pubic shell to get a symbol.
If the public shells for sale company is listed on the bulletin board, the registered or free trade shares can continue to trade. The public shells for sale company can do a private placement immediately. To trade new shares, the newly combined company must first register the shares with the SEC. This process takes three to four months and normally requires filing a registration statement with the SEC. If the public shells for sale does not have a symbol, an application for a symbol is usually made to the NASDAQ bulletin board. The application requires filing a Form C211 by a market maker that is a member of the NASD. The Bulletin Board has no financial requirements for the public shells for sale.
A pink sheet shell is a privately owned quote service not associated with NASD and not subject to SEC reporting requirements.) A trading non-reporting company normally trades on the pink sheet shell. This has many advantages. You may qualify for the piggy back exemption if the company becomes current and compliant with the SEC in its reporting requirements. Directed trading pink sheet shell companies, do not have a 15c211 on file with the NASD. The company must file a registration statement to become a reporting company and will normally require a SEC review. Value of a pink sheet shell is questionable.
When a private company going public needs help they turn to us. The transaction does not go through a review process with state and federal regulators because the private company going public has already completed the process. The transaction involves both of them exchanging information on each other, negotiating the merger terms, and signing a share exchange agreement. Even under the most favorable market conditions, a private company going public can be a complicated, expensive, and even overwhelming process for many business owners. Crucial decisions must be made in unfamiliar territory and at a time of financial and emotional uncertainty for everyone involved. We can help prepare the private company going public for future problems.
Our reverse merger services help with the step by step transactions of private company shareholders who may gain control of a public company by merging it in with their private company. Our reverse merger services help you understand that the private company shareholders receive a substantial majority of the shares of the public company (normally 85 percent to 90 percent or more) and the control of the board of directors. Our reverse merger services can help the transaction get accomplished in as little as two weeks, resulting in the private company becoming a public company. Our reverse merger services can make your transaction easy.
When looking for a public shell merger, it is important to start with a clean company. Due diligence on the public shell merger cannot be over emphasized, advice from your securities counsel, auditors, and a financial consultant should be utilized. These public shell merger companies have no predecessor entities, and, as a result, little baggage in the way of a business failure or other skeletons in the closets. At the closing the company issues a substantial majority of its shares and the board control to the shareholders of the private company. The private company shareholders pay for it and contribute their private company shares to the public shell merger company.
