Should I take my company public by reverse merger?

What is a reverse merger?

A private company uses a reverse merger transaction to take over a publicly traded company. At closing, the private company management. shareholders and directors take control. It's a relatively fast and easy way to become publicly listed, although it is not our preferred way for companies to go public.

Which companies should consider a reverse merger?

A reverse merger might be a good option for companies that have an immediate opportunity to raise capital, complete acquisitions or recruit talent and can't wait 7+ months to complete an IPO or 10+ months to complete a direct listing.

Which companies qualify?

Any company can qualify to complete a reverse merger. However, the officers, directors and controlling shareholders of the public company would need to find your business, team and proposed transaction to be more attractive than other private companies they are speaking to. As a result, many entrepreneurs decide to use a direct listing as the method to go public.

Which stock exchange would a company trade on?

When completing a reverse merger, the private company ends up trading on the exchange that the public company is already listed on. Popular exchanges for reverse merger transactions include the OTC QB and OTC Pink in the United States and the TSX-V, NEO and CSE in Canada. While it is possible to complete a reverse merger onto the NYSE or NASDAQ, it does not happen frequently.

Who raises investment capital?

Since there's no investment banking firm involved in the transaction, all investment capital is raised by officers and directors of the company going public. Usually, capital is raised before, after or in conjunction with a reverse merger transaction closing. We can help clients comply with regulations that allow them to raise capital privately from personal relationships (friends, family & business network) or depending on regulation relied upon, through a wide range of online and offline advertising.

What does a reverse merger really cost?

Completing a reverse merger requires acquiring control of the public entity. Sometimes you can buy control for cash and other times the public company will enter a transaction for retained equity. In addition to the cost of control, you will need an advisor, accountant, auditor, lawyers, and others. The total cost of acquiring control of a public entity and the subsequent cost of corporate compliance with SEC rules and regulations will generally exceed $450,000 and can be significantly more depending on the size and complexity of the companies and transaction.

Do I need an advisor to take my company public?

It's important to have a very experienced advisor to navigate through all the steps required for a private company to complete a reverse merger. We help clients evaluate public companies to merge into, help structure terms and review transaction documents. We help entrepreneurs manage the entire reverse merger process. Our services help entrepreneurs take their company public so they can recruit talent, raise capital, complete acquisitions, and create significant wealth. Connect with us to learn more.

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