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Reverse Merger with an OTC Shell

    The faster, cheaper alternative to a conventional IPO.

What is an "OTC Shell?"

If a public company becomes inactive, its stock is still registered and in public hands. 

The company is called a "shell" because it has no business and may have no assets. 

Such companies are generally traded in the Over The Counter or OTC market, in the OTC Bulletin Board or in the Pink Sheets. Shells with assets may trade on an exchange, if they meet the exchange listing requirements.

Key Benefits to a Reverse Merger with an OTC Shell

  • Faster than an IPO
  • Cheaper than an IPO
  • You set the terms, not the IPO underwriter -- you can get full value for your company
  • You don't have to give up control
  • Be sure of going public even in a bad market 
  • Makes it easier to raise money because your investors can see an exit strategy -- selling their stock in the public market
  • You can give stock options to employees
  • May solve estate tax problems

Costs

Costs vary widely. You can buy control of a shell for cash or merely allow the shell owner to keep part of the stock, or any combination thereof. This depends on the probable market value of your company and your willingness to give up equity. The total cost also depends on legal and accounting expenses. On the low side, the cost of a shell may be $50,000, and on the high side, deals costing several hundreds of thousands of dollars or more have been reported. If the shell has assets, shell owners want to receive something for the value of those assets as well. 

To learn more about how to go public using an OTC shell or public shell for a reverse merger, click here now. 

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Send mail to mailto:lux.investor@gmail.com with questions or comments about this web site.   Reverse Merger Info Copyright 2006 John Lux     Last modified: November 14, 2008

Contact John to have all your questions answered about reverse mergers without obligation in a friendly, relaxed manner.

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