Reverse IPO (Reverse Takeover or Reverse Merger)
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Dr. Brent Lundell, PhD, MBA
Apr 16, 2013, 2:40:12 PM4/16/13
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Please consider this free-reprint article written by:
Dr. Brent Lundell, PhD, MBA
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Article Title: Reverse IPO (Reverse Takeover or Reverse Merger)
Author: Dr. Brent Lundell, PhD, MBA
Word Count: 546
Article URL: http://www.isnare.com/?aid=1832388&ca=Business
Format: 64cpl
Contact The Author: http://www.isnare.com/eta.php?aid=1832388
Easy Publish Tool: http://www.isnare.com/html.php?aid=1832388
*********************** ARTICLE START ***********************
A Reverse IPO is the purchase of a public company by a private company enabling the private company to immediately become a public company. This purchase allows the private company for forgo the expensive and laborious task of going public by traditional methods (IPO).
Private companies primarily undertake a Reverse IPO because there are far more financing options available to public companies than private ones including additional share distribution and bond offerings.
A reverse takeover is simple to understand.
� Shareholders of the private company purchase control of a shell company. (Recall that a shell company does not have any assets or liabilities. The company only remains in organization structure).
� The private company is then merged with the public company and the private company bypasses the review process by state and federal regulators since this process was already completed with the original company.
Other points of interest in this process:
� The private company shareholders receive proportional shares of ownership in the new company.
� The transaction is easy, simple, and takes less than three months to complete.
In order to protect investors, even though the merger makes the private company a public one, the merged companies are required to file audited financial statements and extensive legal disclosures (K8) immediately following the reverse merger.
All public offerings can be divided into two functions.
1. Going public.
2. Raising capital.
In a Reverse IPO the raising capital part of the public offering is either eliminated, or at the very least, delayed. Instead, the entire goal of the Reverse IPO is to take the company public.
Often, private company stockholders require that the shell company stock holders--- who will receive new company stock--- not sell the new stock for up to a year or more.
Actual Transaction
The transaction is between two companies, even though controlling interest is being held by the private company investors. Therefore both companies are able to negotiate terms of agreement such as stock sharing, exiting of employees, etc.
At Closing
� The private company pays for the shell company by contributing their stock to the shell company
� The private company obtains majority control of stock and the board of directors, and
Benefits
� A Reverse IPO (Reverse Takeover) can be completed in 30 days.
� Costs much less than other forms of �going public.�
� There is less stock dilution than with other public offering methods.
� It is less risky than IPOs, because market conditions do not affect the price of stock --since capital is not being raised through the sale of stock.
Disadvantages
1. The shell company:
� May have kept poor records.
� Shell company stock holders may be along for the ride and want to liquidate their stock as fast as possible.
2. Private company stock is only liquid in a public market, or a private one, if an interest in the stock exists.
3. A reverse IPO takes time to develop and finding the company to purchase can be difficult. The company must be seasoned and meet the necessary requirements by the federal trade commission.
About The Author: Dr. Brent Lundell owns http://www.GainStreamGroup.com, a venture capital sourcing and consulting company, and is a partner in The Guinn Consultancy Group, Inc. The Guinn Consultancy Group provides a wide array of business services, including seminars, webinars, and venture capital sourcing services. See the group website at www.theguinnconsultancygroup.com or contact them for additional information at 800-335-9269.
Please use the HTML version of this article at:
http://www.isnare.com/html.php?aid=1832388
*********************** ARTICLE END ***********************
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Message delivered directly to members of the group:
publish-the...@googlegroups.com
*****************************************************************
Please consider this free-reprint article written by:
Dr. Brent Lundell, PhD, MBA
*****************************
IMPORTANT - Publication/Reprint Terms
- You have permission to publish this article electronically in free-only publications such as a website or an ezine as long as the bylines are included.
- You are not allowed to use this article for commercial purposes. The article should only be reprinted in a publicly accessible website and not in a members-only commercial site.
- You are not allowed to post/reprint this article in any sites/publications that contains or supports hate, violence, porn and warez or any indecent and illegal sites/publications.
- You are not allowed to use this article in UCE (Unsolicited Commercial Email) or SPAM. This article MUST be distributed in an opt-in email list only.
- If you distribute this article in an ezine or newsletter, we ask that you send a copy of the newsletter or ezine that contains the article to http://www.isnare.com/eta.php?aid=1832388
- If you post this article in a website/forum/blog, ALL links MUST be set to hyperlinks and we ask that you send a copy of the URL where the article is posted to http://www.isnare.com/eta.php?aid=1832388
- We request that you ask permission from the author if you want to publish this article in print.
The role of iSnare.com is only to distribute this article as part of its Article Distribution feature ( http://www.isnare.com/distribution.php ). iSnare.com does NOT own this article, please respect the author's copyright and this publication/reprint terms. If you do not agree to any of these terms, please do not reprint or publish this article.
*****************************
Article Title: Reverse IPO (Reverse Takeover or Reverse Merger)
Author: Dr. Brent Lundell, PhD, MBA
Word Count: 546
Article URL: http://www.isnare.com/?aid=1832388&ca=Business
Format: 64cpl
Contact The Author: http://www.isnare.com/eta.php?aid=1832388
Easy Publish Tool: http://www.isnare.com/html.php?aid=1832388
*********************** ARTICLE START ***********************
A Reverse IPO is the purchase of a public company by a private company enabling the private company to immediately become a public company. This purchase allows the private company for forgo the expensive and laborious task of going public by traditional methods (IPO).
Private companies primarily undertake a Reverse IPO because there are far more financing options available to public companies than private ones including additional share distribution and bond offerings.
A reverse takeover is simple to understand.
� Shareholders of the private company purchase control of a shell company. (Recall that a shell company does not have any assets or liabilities. The company only remains in organization structure).
� The private company is then merged with the public company and the private company bypasses the review process by state and federal regulators since this process was already completed with the original company.
Other points of interest in this process:
� The private company shareholders receive proportional shares of ownership in the new company.
� The transaction is easy, simple, and takes less than three months to complete.
In order to protect investors, even though the merger makes the private company a public one, the merged companies are required to file audited financial statements and extensive legal disclosures (K8) immediately following the reverse merger.
All public offerings can be divided into two functions.
1. Going public.
2. Raising capital.
In a Reverse IPO the raising capital part of the public offering is either eliminated, or at the very least, delayed. Instead, the entire goal of the Reverse IPO is to take the company public.
Often, private company stockholders require that the shell company stock holders--- who will receive new company stock--- not sell the new stock for up to a year or more.
Actual Transaction
The transaction is between two companies, even though controlling interest is being held by the private company investors. Therefore both companies are able to negotiate terms of agreement such as stock sharing, exiting of employees, etc.
At Closing
� The private company pays for the shell company by contributing their stock to the shell company
� The private company obtains majority control of stock and the board of directors, and
Benefits
� A Reverse IPO (Reverse Takeover) can be completed in 30 days.
� Costs much less than other forms of �going public.�
� There is less stock dilution than with other public offering methods.
� It is less risky than IPOs, because market conditions do not affect the price of stock --since capital is not being raised through the sale of stock.
Disadvantages
1. The shell company:
� May have kept poor records.
� Shell company stock holders may be along for the ride and want to liquidate their stock as fast as possible.
2. Private company stock is only liquid in a public market, or a private one, if an interest in the stock exists.
3. A reverse IPO takes time to develop and finding the company to purchase can be difficult. The company must be seasoned and meet the necessary requirements by the federal trade commission.
About The Author: Dr. Brent Lundell owns http://www.GainStreamGroup.com, a venture capital sourcing and consulting company, and is a partner in The Guinn Consultancy Group, Inc. The Guinn Consultancy Group provides a wide array of business services, including seminars, webinars, and venture capital sourcing services. See the group website at www.theguinnconsultancygroup.com or contact them for additional information at 800-335-9269.
Please use the HTML version of this article at:
http://www.isnare.com/html.php?aid=1832388
*********************** ARTICLE END ***********************
- To distribute your articles go to http://www.isnare.com/distribution.php
- For more free-reprint articles go to http://www.isnare.com
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