Reverse Merger & SPAC Blog

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22 Sep Using Reverse Mergers for Industry Consolidation and “Roll Ups”

The reasons for performing a reverse merger are wide and varied. Each individual situation is unique and typically requires an in depth understanding of the underlying goals of the company in question as well as the pitfalls and risks associated with any course of action relative to the business. In many instances, going public is not the right answer. However, in certain situations, going public is the very best move for maximizing shareholder value. To be specific, going public is ideal in large dispersed industries where consolidation is present and where industry roll-up opportunities exist. Many a financial engineer has made their fortune by...

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19 Sep Horizon Pharma #RTO of Vidara Therapeutics on NASDAQ

This news initially came yesterday and the deal was set to be closed as of today. The reverse takeover by Horizon Pharma of Vidara Therapeutics represents a logical combination of two biotherapeutic companies. Both firms hold proprietary rights to biotechnology drugs for the treatment of inflammation, osteoporosis and arthritis. Horizon Pharma, Inc. (NASDAQ: HZNP) today announced that at its Special Meeting of Stockholders held today, proposals related to Horizon's acquisition of Vidara Therapeutics International plc were approved by Horizon's stockholders. As previously announced, on March 18, 2014, Horizon Pharma, Inc. ("Horizon"), Vidara Therapeutics Holdings LLC, Vidara Therapeutics International plc, an Irish public limited...

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18 Sep Alibaba #IPO: Senator Bob Casey is Presumptuous

I just picked up piece from Senator Bob Casey (D) of Pennsylvania from NY Times DealBook. He's claiming the deal structure of the Alibaba IPO should cause the regulators to have more scrutiny for other similarly structured deals that are either reverse mergers or some type of Variable Interest Entity (or VIE). His claim is that foreign (and in particular Chinese) -based entities have been responsible for over $18 billion in losses to American investors over a decade. He's right about picking out the bad apples, but unfortunately citing a decade's worth of reverse mergers and claiming past performance will be...

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Startup Diagram Structure

17 Sep Should You Take Your Startup Public?

I love start up companies. Bold entrepreneurs are a big part of the American spirit. Assisting them has always been a passion as many a consultant with enough life experience has been in similar shoes. In working with these folks we're often asked, "is it a good move to take my start up public?" or "is my start up a good candidate for a reverse merger?" These are almost always "it depends" questions. For most, the answer is flat out "no", for the rest the caveats, risks and opportunities are outlined below. Hopefully this provides some insight. Types of companies where...

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16 Sep Fraud, Vitamins & Reverse Takeovers

Some great news stories hit the press today that I thought would be worth covering. Twinlabs Reverse Merger The first comes from Twinlabs, maker of the popular Metabolife supplements just went public again. Details of the transaction as reported by TheDeal. The reverse merger with San Diego-based shell company Twinlab Consolidated Holdings Inc. was scheduled to close on Sept. 15, according to a Sept. 4 filing with the Securities and Exchange Commission. The shell company was previously known as Mirror Me Inc. before changing its name last month in preparation for the merger. Mirror Me had gone public in May with a stock offering...

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15 Sep The World’s Richest Doctor Got His Start with a #ReverseMerger

Sometimes I get tired of the industry touting Blockbuster, Berkshire Hathaway, Occidental Petroleum and Texas Instruments as the poster children for reverse takeovers. They're certainly helpful, but I'm always on the lookout for stellar, recent examples. I just finished reading an interesting piece in Forbes about how the world's richest doctor--Patrick Soon-Shiong--is trying to fix medicine with a combination of capital, big data and true grit. It's a fascinating piece that not only outlines his plans for completely altering the landscape, structure and ultimate costs of the healthcare system, but also showcases that he began his foray into the billionaire...

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dirty shell

15 Sep Dirty Public Shells

If you've been around this industry, you'll recognize an oft-repeated request, "can you provide me with a clean public shell corp?" The problem with most public shell corporations is that they're often a shell because something died inside. What remains of the carcass almost always needs thorough investigation through due diligence and some good cleaning-up. Knowing where the potential trip-ups can occur is helpful, but nothing replaces thorough due diligence. Shell Share Ownership Disputes & Difficulty. Shell shares can be very messy. There may be current disputes that haunt the shell and some shareholders may have preferred shares that are different...

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EquityNet

10 Sep Equitynet’s True Untapped Potential

Although not yet fully implemented, the JOBS Act promises to be a complete game-changer for the capital markets. I don't think we're truly cognizant of how huge the opportunity equity crowdfunding presents to both investors and entrepreneurs alike. As many have touted, it truly democratizes capital, providing needed liquidity to both nascent and established businesses alike. Even when crowdfunding becomes fully integrated into the complex and regulated financial system, the portals will still be required to follow the rules of engagement. But massive opportunity awaits them. And, while there are a number of crowdfunding portals out there, I've chosen to...

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Due Diligence

10 Sep Reverse Merger Due Diligence

As I've said before, I think a shell is a great adjective for a previously publicly traded company as it indicates something died inside. Proper due diligence of a public shell is an absolute necessity for private companies looking to take their business to the public markets. What follows is a good starting list of due diligence items (although not complete exhaustive) when investigating a public shell corporation.   Check required SEC filings including those required by directors, officers and shareholders with greater than 5% equity in the business. It's good to ensure all filings are current and such reports should provide...

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09 Sep Drones & 3D Printing — What’s Next?

Going public early through the cheaper "back door" always seems favors companies poised at high growth markets. Traditionally new technology, changes in regulation (like the recent spat of marijuana reverse mergers) and Intellectual Property help to push smaller microcap companies to raise money via the reverse merger route. Some of the more sexy markets for tech these days are also beginning to use reverse mergers to take their companies public, raise awareness and ---ultimately---raise money for their businesses. The first comes to us from the maker of drones, Drone Aviation (as of the writing of this piece, the stock sits at...

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