Reverse merger

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Related to Reverse merger: Reverse Triangular Merger

Reverse Merger

An act where a private company purchases a publicly traded company and shifts its management into the latter. It also normally involves renaming the publicly traded company. This allows private companies to become publicly traded while avoiding the regulatory and financial requirements associated with an IPO. In order for a reverse merger to happen smoothly, the publicly traded company is usually a shell corporation, that is, one with only an organizational structure and little or no activity. The two businesses can then merge the private company's product(s) with the public company's structure. It also makes initial trading less dependent on market conditions, a key risk in IPOs. However, it is important to note that a reverse merger only provides the private company with more liquidity if there is a real market interest in it.

Reverse merger.

In a reverse merger, a privately held company purchases a publicly held company and, as part of the new entity, becomes public without an initial public offering (IPO).

It's described as reverse because in the more typical merger pattern a public company purchases a private company to expand its business.

References in periodicals archive ?
The PharmaMar reverse merger with Zeltia had been approved in the Annual Shareholders meeting of Grupo Zeltia in accordance with the proposal of the Board of Directors.
The Company completed the reverse merger for 6,975,000 shares of the Company's common stock.
The PCAOB research revealed that 159 companies from China had accessed US capital markets through a reverse merger between January 2007 and March 2010, representing 26 percent of all deals of this kind.
140) A reverse merger then would allow start-up companies to keep more equity in their company and raise money in a more cost-efficient manner.
Ownership Dilution: A reverse merger requires the owner of a private company to sell a percentage of his company to either the investment bankers or shell owner.
Students should be encouraged to read the case, access the SEC's EDGAR database to obtain additional information about the companies and the reverse merger transaction, and respond to the questions listed in the case.
Let's look at some advantages and disadvantages of a reverse merger so you can decide or help your boss decide the best course of action.
Doctrine does not apply: When each step is analyzed independently, the reverse merger qualifies as a QSP.
The reverse merger will allow Riverwood to combine its $l.
A reverse merger differs from the traditional initial public offering (IPO) in that the company that is interested in going public acquires the assets of an existing public company.
Directors of Zeltia resolved today to propose to the Company's Shareholders' Meeting, to be held in June, that a reverse merger take place, i.