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What are some of the benefits of a reverse merger?

On Behalf of | Nov 27, 2015 | Mergers & Acquisitions

Executives who run successful businesses may wish to further the success of their company by making shares of the company’s stock available in the public stock market. This may give a company better liquidity and access to valued capital markets. Many New York professionals use the reverse merger method to make their businesses public. The following points can help you decide if a reverse merger, sometimes known as a reverse takeover, is the right option for your business.

To begin a reverse merger, your company’s investors would first gain most of the shares of a public shell company. According to Investopedia, both companies would then exchange shares and stock to transition the private company into a public one. You might find this simplified process desirable because it can allow you to reach your goal without having to raise capital. Conventional initial public offerings (IPOs) may take several months to over a year to complete; however, reverse mergers may be completed within a few weeks.

Having a public company can also provide extra benefits in expanding your business and attracting talent. For example, employee stock incentive plans may be an attractive option for potential hires. Corporate stock can also be used to acquire companies in future mergers. It is important to consider that, as with any merger and acquisition process, reverse mergers may require the assistance of an attorney to ensure your company’s best interests are represented. Therefore, this blog post is not meant to take the place of a lawyer’s advice.

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