A reverse merger is a type of business sale that involves both a publicly traded company and a private company. Instead of the traditional sales structure where a large public company acquires a private company for its ideas, product or people, a reverse merger involves the private company making the purchase.
The private company usually looks for a dormant or almost dormant public company. Usually, the public company has little in the way of assets or employees, and it might not even be a well-branded company at the time of the purchase. The value is not in these traditional assets but in the fact that the company is already publicly traded.
Going public can make a company more attractive for buyers, investors and even customers. It also diversifies income methods for owners and provides access to investors in the form of shareholders. But it can take months or even years for a private company to go public through the traditional IPO process. By buying a publicly traded company, a business can go public in just a few weeks.
Reverse mergers are not for the faint of heart or anyone who isn’t a savvy business professional. They also require impeccable timing and documentation from financial and legal sides, making it a good idea to involve experienced professionals. Our firm works with you to understand if a reverse merger is right for you, and we can help you throughout the entire process to ensure all details are handled appropriately.
Reverse mergers tend to work best for well-established private companies with large revenue streams. These companies are probably already following regulatory reporting guidelines to some degree, and we can help you figure out what else you need to do to go public.
