Reverse Merger Transaction:

Many private companies are ready to make the transition to the next level by going public. The ability to do a traditional Initial Public Offering (IPO) is severely limited compared what it was prior to the passage of Sarbanes-Oxley.  There just aren’t as many investment banks doing initial public offerings (IPOs) as there was then.  As a result, the alternative and more common method of going public is to merger with a dormant company that is already public.

There are many companies that are already public but longer have any operations. These companies are known as public “shell companies.”  A private company that mergers with one of these companies would be completing what is know as a reverse merger. This is known as a reverse merger because technically the public company is the surviving company, but in effect it is the operations of the private company that survive.

In a reverse merger transaction the private company merges with the public shell company. The owners of the private company exchange their private company shares for shares in the public company and become majority shareholders of the public company.  From the standpoint of the public company they have acquired the operations of the private company;  from the standpoint of the private company they have acquired the shareholder base of the public company and its public status.

If you are interested in exploring the possibilities of a reverse merger with one of our portfolio companies please feel free to contact us.  We are interested in talking to all interested parties.