All too often, these reverse mergers are accompanied by a reverse split of the shares that were outstanding in the public company, and an issuance of new shares to the insiders of the acquiring company. So, the old shareholders are reverse split out of existence.
Buying before a reverse merger: a great way to lose serious cash!
When a company repurchases its own stock the outstanding shares decrease.
A share repurchase is a program by which a company buys back its own shares from the marketplace, usually because management thinks the shares are undervalued, reducing the number of outstanding shares.
The company buys shares directly from the market
Because a share repurchase reduces the number of shares outstanding, it increases earnings per share and elevates the market value of the remaining shares.
After repurchase, the shares are canceled or held as treasury shares, so they are no longer held publicly and are not outstanding.
A reverse merger is the most common alternative to an initial public offering (IPO) or direct public offering (DPO) for a company seeking to go public.
A “reverse merger” allows a privately held company to go public by acquiring a controlling interest in, and merging with, a public operating or public shell company.
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