Back Door Listing

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Back Door Listing

Informal for reverse acquisition. An act in which a private company purchases a publicly-traded company and shifts its management into the latter. This allows private companies to become publicly traded while avoiding the regulatory and financial requirements associated with an IPO. In order for a reverse acquisition 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 acquisition only provides the private company with more liquidity if there is a real market interest in it.
References in periodicals archive ?
LSE: RNS) which would, had it proceeded, have amounted to a Reverse Takeover under the AIM Rules and a back-door listing for the purposes of the ASX Listing Rules
The company entered the local stock market last year using the back-door listing route last year, with Federal Resources Investment Group Inc.
Together with these companies, ICBC offers services for corporate clients in capital operation activities such as Pre-IPO, public offering, back-door listing, asset injection, mezzanine finance, private placement and cross-border M&A.
But, by doing so the TSE risks being caught in a back-door listing that circumvented its own rules that require companies to show improved profitability before any IPO is sanctioned.
When Zhengzhou Baiwen, a struggling retailer, defaulted on loans late last year its share price shot up before it was sold to another firm who wanted a back-door listing.
4 Listing in China's stock exchange through back-door listing or IPOs
Coming on top of the 2013 back-door listings by Mad Butcher Holdings and Esquires, suddenly people are noticing that franchising can be big business, too--and that some of our franchise systems are not only competing successfully with imports from Australia and the US at home, but have the potential to do so on a global scale.