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 ?
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.
Chapter Nine offers an analysis of the development trends of China's securities brokerage market in terms of industry restructuring, the transforming business model and increasing foreign participation and listings in China's stock market through back-door listings or IPOs.
4 Listing in China's stock exchange through back-door listing or IPOs