Some of the shells selling for very low prices include those with a history – the so-called “legacy” shells that had a real, serious operating business that was either sold, went out of business or was transferred out of the entity for whatever reason. These are different from the “footnote 32/172″ shells that were in fact set up as acquisition entities but pretend to have a real business in mining or some such. The legacy shells usually went public with an IPO, or prior reverse merger, and really operated for a bit.
In my prior column on shell prices dropping, I suggested a big part of the drop was the proliferation of footnote 32/172 shells, and that the lower prices were mostly attaching to them. But it seems that either this trend and/or others have caused all shells, even legitimate legacy shells, to see a major price drop, in many cases below $300,000. So here’s what I am wondering. Is it possible that the market has finally begun to realize that the true difference in value between a Form 10 shell and a true legacy shell in fact is minimal at best? As many of you know, I have always argued that trading in a shell is a benefit that is at best illusory. Not that there are not real benefits to a trading stock in a shell, but they are typically also offset by the uncertainty of the legacy shell’s prior business and what, if any, liabilities from the past will haunt the successor. That concern does not exist in a Form 10 shell.
And since Form 10 shells are very inexpensive to set up, the prices to acquire one have always been low. It may be that the reality of true value has begun to hit the marketplace along with all the other factors mentioned in my prior column. What are the implications of that? Stay tuned.