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.
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