iStock_000003307226XSmallOur Capital markets and Securities’ team is familiar with and has successfully conducted Reverse Mergers, also referred to as a reverse takeovers (RTO’s) or Alternative Public Offerings (APO’s). Reverse mergers are an alternative method to the traditional initial public offering (“IPO”) for companies looking to go public. In an APO, a private company merges with a public shell company, allowing the private business to be publicly traded without an expensive, risky and dilutive public offering.

Advantages of Going Public Through a Reverse Merger

The costs involved in acquiring a publicly traded and SEC registered shell company are typically much lower than the costs associated with a traditional IPO involving an underwriter. The APO process is attractive to businesses because, after becoming a publicly traded company, the business can use its stock as currency to buy assets, other businesses (M&A), to draw quality administration, and to trade building valuation.

A reverse merger also offers the following advantages:

  • A reverse merger is faster than an IPO
  • An APO is not dependent on an IPO market windows
  • Management sets company’s valuation
  • Multiple financing options, including private investment in public equities (PIPEs), are available to raise money for working capital, acquisitions and reverse merger expenses
  • It is only necessary to raise the amount of capital a business needs. Typically IPOs are generally used for raising large amounts of money for larger companies
  • There are fewer management distractions than the process of going public through an IPO

Trading for public companies formed through a reverse merger typically starts on the OTC Bulletin Board and allows for a possible listing onto Nasdaq, NYSE or AMEX. This alleviates the burden of initial exchange listing requirements at the time of going public.

Our lawyers manage the reverse merger process from due diligence, review of the business plan, negotiating the merger or acquisition, and structuring the transaction to drafting the legal documents, including the private placement memorandum and the registration statement.

All our services are on a Flat Fee basis

For more information please call 646-502-7001 or email us at info@JSBarkats.com

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