Reverse Merger Tip of the Week: Watch Out for "Hurry, Don't Worry"
By David Feldman at 3 February, 2009, 4:16 am
In some cases, private companies and their investment bankers face tremendous pressure from a shell operator to complete a deal quickly. “We have someone else ready to take it,” he says, “Hurry up, don’t worry about due diligence, everything is fine, if you don’t take this by tomorrow you lose it.”
This hurry-up attitude can surely be a sign of dirty shell shenanigans. Any legitimate shell operator should patiently encourage due diligence. Tim Keating of Keating Investments, a well-known investment banker who was very active in reverse mergers, set the standard. If Tim was selling a shell, he sent beautifully organized binders containing everything necessary for a due diligence review, and other information as well.
Practice tip: Always get a list of shareholders from the shell’s transfer agent and carefully scrutinize who owns what, asking questions about relationships and making sure all appropriate filings were made.
No comments yet.