Reverse Merger: Justifications and benefits:
Many keep wondering why the billion dollar companies like UST Global and SeriousIQ are joining with a small company like PASO. If you look at the mechanics, you will realize that there is a reason why big private companies have interests in reverse merger.
A reverse merger s often the most expedient and cost-efficient way for a private company that holds shares that are not available to the public to begin trading on a public stock exchange. Prior to the rise in the popularity of reverse mergers, the vast majority of public companies were created through the initial public offering (IPO) process.
In a reverse merger, an active private company takes control and merges with a small or dormant public company. These small public companies rarely have assets or net worth aside from the fact that they previously had gone through an IPO or alternative filing process.
It can take a company from just a few weeks to up to four months to complete a reverse merger. By comparison, the IPO process can take anywhere from six to 12 months. A conventional IPO is a more complicated process and tends to be considerably more expensive, as many private companies hire an investment bank to underwrite and market shares of the soon-to-be public company.
Reverse mergers allow owners of private companies to retain greater ownership and control over the new company, which could be seen as a huge benefit to owners looking to raise capital without diluting their ownership.
In most cases, a reverse merger is solely a mechanism to convert a private company into a public entity without the need to appoint an investment bank or to raise capital. Instead, the company aims to realize any inherent benefits of becoming a publicly listed company, including enjoying greater liquidity.
As you can see reverse merger allows private companies owners to retain greater ownership and enable them to go public without going through the complicated process. This makes sense why big billion dollar companies like UST Global and SeriousIQ making a joint venture and merging with PASO. They actually have greater interest than PASO in the merger. For us the little investors, have a great opportunity to become part of that grand plan if it goes through as planned.
