Reverse Takeovers (RTO’s)

To become a public company quickly, one of the most expeditious routes is to acquire an existing public company and merge the private company into it. In such a “reverse merger” or “reverse takeover” (RTO), a private company merges with a public company with no assets or liabilities. This public company may be called a “shell corporation” if all that exists of the original company is its corporate shell structure.  If the public company is an operating company wishing to go private by selling its public vehicle, it will be called a “non-shell corporation” which is best for going public through the RTO process. Merging the two companies enables the private company to become public at a fraction of the cost of the conventional IPO. Taking a company public through a reverse merger is not new at all.  In fact, nearly one out of three listed public companies have become publicly traded through this process – companies like Turner Broadcasting, Berkshire Hathaway, and even the New York Stock Exchange (NYSE) became publicly traded thru this process.

We assist companies in going public. If you have a private client that would like to go public, our group assists with each component of the transaction involving the PCAOB accounting firm, securities law firm, investor awareness IR/PR groups, broker-dealer underwriters and market makers.  All components are handled by us in creating a public company in completing a reverse merger, doing the SEC filings, accessing the capital markets through offerings, and maximizing the market’s awareness of the company’s new publicly traded status to the investment community, thus establishing a public market for its shares.  We can deliver custom-made “non-shell corporations” that are formed with the investor awareness (IR/PR) programs and capital formation functions built into them that are specifically structured for individual ISSUERS that include DTC eligibility and 400+ shareholders, if needed – i.e.: a minimum of 400 shareholders is required for an issuer to up-list onto a listed exchange (Nasdaq or NY Amex).

Note, International Monetary will pay finder fees to intermediaries for referrals of any private companies that are interested in going public.

Reverse Merger Benefits

Higher Valuation:  Historically, publicly traded companies enjoy significantly higher valuations than private companies.

Capital Formation:  Raising capital is typically much easier because of the added liquidity and an exit strategy already inherent for investors.

M & A:   Merger and Acquisitions can be completed with stock (equity) which can be used as currency structured in a manner that’s much less dilutive to insiders.

Incentives:   Stock options or stock incentives can be extremely useful in attracting top management candidates and retaining valuable employees.  Form S-8 stock can be issued for officers, directors and consultants, as well.

Financial Planning:   Public stock can provide a long term exit strategy for the founders or during acquisitions when a seller would like to retain some company equity versus a straight out purchase so that the seller can be further rewarded when the public company’s stock continues to perform well (a public company’s share price will largely follow the company’s fundamentals)..

Reduced Costs, Time and Risk:  The costs are significantly less than the cost required for an initial public offering.  The time frame necessary to achieve a public listing is considerably far less than that for an IPO. And, additional risk is involved in an IPO because it may be withdrawn due to unstable market conditions even after most of the upfront costs have been expended.

NOTICE:  When a company goes public, it only wants to do so once so it’s so very important to do it right the first time so that there are no negative consequences.  We offer a customized capital formation plan with the top investment banks, broker-dealers, PIPE underwriters, and funds, with major IR/PR investor awareness programs that are incorporated for a minimum of 1 year for marketing the company’s security, building the company’s shareholder base, enhancing the liquidity and maintaining a public market valuation that’s in accordance to other similar public companies in its industry – International Monetary’s investor awareness programs are fully integrated with the going public/capital formation process so that the IR/PR publicity program is greatly maximized, but expenses on the public company’s 10-Q’s and K’s are significantly minimized.