the private operating company shareholders exchange their shares of the private company for either new or existing shares of the public company
* At the end of the transaction, the shareholders of the private operating company own a majority of the public company and the private operating company has become a wholly owned subsidiary of the public company.
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.
A “shell company” a publically traded company with (1) no or nominal operations and
(2) either no or nominal assets or assets consisting solely of any amount of cash and cash equivalents.
The Cost of the Shell
In a Reverse Merger transaction, the private operating business must pay for the public shell company.
That payment may be in cash, equity or both.
The average cash value of a fully reporting public entity with no liabilities, no issues and which is otherwise “clean” is between $280,000 – $400,000.
the private operating company shareholders exchange their shares of the private company for either new or existing shares of the public company
* At the end of the transaction, the shareholders of the private operating company own a majority of the public company and the private operating company has become a wholly owned subsidiary of the public company.
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.
A “shell company” a publically traded company with (1) no or nominal operations and
(2) either no or nominal assets or assets consisting solely of any amount of cash and cash equivalents.
The Cost of the Shell
In a Reverse Merger transaction, the private operating business must pay for the public shell company.
That payment may be in cash, equity or both.
The average cash value of a fully reporting public entity with no liabilities, no issues and which is otherwise “clean” is between $280,000 – $400,000.
The primary advantage of a Reverse Merger is that it can be completed very quickly.
As long as the private entity has its “ducks in a row,” a reverse merger can be completed as quickly as the attorneys can complete the paperwork.
Having your “ducks in a row” includes having completed audited financial statements for the prior two fiscal years and quarters up to date
(or from inception if the company is less than two years old),
and having the information that will be necessary to file with the SEC readily available.