An Overview of Reverse Mergers

As an attorney with Dean Law Corp, Faiyaz Dean has worked with a wide variety of clients on securities-related matters. Among Faiyaz Dean’s areas of expertise is providing assistance with reverse mergers.

A reverse merger, or a reverse IPO, is an event where a public company is taken over by a private company. This process, which can help streamline the process of a company going public, involves private company shareholders purchasing the shares from shareholders of a public company. Typically then these shareholders then receive the majority of the public company’s shares, and have control of the company through the board of directors.

There are several advantages of the reverse takeover method. The company can become publicly held at a lesser cost than other methods. It might also involve less stock dilution than what would accompany a traditional initial public offering, or IPO. It also relies less on the current market conditions than IPOs. This reduces the risk since only those involved in the two companies are part of the deal.