RE: Advantages of doing a reverse merger
A traditional IPO does require a much larger investment and rigorous process than a reverse merger. There are many reasons a company would want to go public. I think the two most significant are to:
1. Raise capital
2. Achieve liquidity
IPO's result in both of these objectives simultaneously. Reverse mergers, although some people might disagree, are best used to achieve liquidity, not raise capital. Raising capital is a marketing effort best accomplished with the assistance of underwriters, investment relation firms, analysts, etc... Much of the cost of an IPO is from the promotional side.
With a reverse merger, a small private company ($10-$30 million) could achieve liquidity for approximately $150,000. With liquidity, the company may have more purchasing power with its stock, better employee retention and a higher company valuation. If raising capital is necessary, the company could engage in a secondary offering a year or two later to promote the stock.
Reverse mergers are not for everyone company. It seems to me they make sense for smaller companies, with a niche investor community, where liquidity in its stock is necessary for the strategic direction.
Just one man's thoughts.
