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 a private company into it. In such a “reverse merger” a private company merges with a public listed company with no assets or liabilities. This public company is also called a “shell corporation” since all that exists of the original company is its corporate shell structure.  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 reverse merger is not new at all.  In fact, nearly one out of three public companies became publicly traded through 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 accounting firm, law firm, IR firm, and market makers – all are handled by us in creating a public company thru a reverse merger, SEC filings, accessing the capital markets through offerings, and maximizing the awareness of the company’s new publicly traded status to the investment community, thus establishing a public market for its shares.

We can also create a blank check public shell company for advisors.  A public shell is something every consultant, capital raiser, or investor should have.  It’s an ideal way to insert oneself into a deal to receive equity, or a larger percentage of equity than you may have otherwise received.  Assuming a private company wants you to raise capital or provide consulting services, if you have a public company to merge them into, you can keep a percentage of the shares; or more shares than without the shell corporation.

NOTE:  Creating a new public shell company would only be appropriate if you did not currently know the company you would like to take public. If you have a specific company now that you would like to take public, we can take that company public directly or through a reverse merger (or RTO).

Reverse Merger Benefits

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

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

M & A:   Merger and Acquisitions can be made with stock which can be used as currency and can be structured so it is less dilutive to the insiders.

Incentives:   Stock options or stock incentives can be useful in attracting management 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 an earn-out versus a straight purchase.

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

ALSO, we are happy to pay a referral fee if you are aware of a company that would like to go public.