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Tuesday, October 23, 2007 7:38:08 PM
I don't see DPBM doing a reverse merger. Who are they going ot BUY? Odessey?
The question was "what is the differnce between a reverse merger and a reverse split". I answered that. There is no thinking of it happening with DPBM right now though.
<<Ok, now ask yourself where the funding comes from to do such a merger? It's called dilution, dilution big time. >>
NOt true. Big dilution? No. If a company with 5MM in revenues buys a company with 20MM in revenues, graned the investors own a lesser portion of the new company. But, it is a smaller portion of a bigger pie. The overall affect in a GENERAL reverse merger is that the investors gain a larger company, but own a lesser share of that bigger company.
As for the costs? Yes, that has to come from sonmewhere. And the buying company needs to make sure they can aford it, or they have to sell some private shares to fund the costs of the merger. Most times if it is two pink sheets it is a merger, not a reverse merger, as neither is worth anything. But, most reverse mergers are not between two pinks. Many times one is private, or on a larger market. Also many times they BOTH are bigger (SIRI and XMSR for example)
But it doesn't automatically mean big dilution. Becasue the pie is bigger.
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