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Reverse
Mergers Explained
Reverse Merger
-- How It Works
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Reverse Merger with an OTC Shell -- How a reverse merger deal works
The public shell has existing public shareholders who may own 10% to 50% of
the public company. The private company has substantial assets and business. The
two companies merge to form one surviving public company with stock in public
hands and substantial assets and business. This is called a reverse merger
because the smaller public company is acquiring the larger private company. In
an ordinary merger, the larger company usually acquires the smaller company.
Step by Step
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You decide now to go public with an OTC shell
in a reverse merger
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You locate a clean public shell and negotiate
with the seller
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You sign a purchase agreement
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Due diligence and accounting statements are
prepared
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Merger documents are prepared and the merger is
consummated
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The new company files with the SEC and NASD
Note:
The SEC has new rules governing shell deals. See SEC Release No. 33-8587. To
find out what this means to you, contact us.
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