Tip of the Week: Financing in Reverse Mergers

Generally speaking, financing is easier to obtain when a company goes public because investors are seeking an opportunity for liquidity.  Although it is difficult to overstate the importance of financing as regards reverse mergers, about half of these mergers, in recent years, involve no financing whatsoever.  This does not imply that there is no intention ...

Tip of the Week: Beware the IPO Myth

Myth: Strong market support for a stock always follows a traditional IPO. You have probably heard this line a million times; however, nothing can be further from the truth. The basics of an IPO work like this. A company hires an investment banking firm to serve as lead underwriter of the stock offering. A prospectus ...

Tip of the Week: Are You Sure You Should Go Public?

There are five major advantages to going public. The desire to benefit from some or all of these should be the reason you want to make the move from private to public. Take a look at the following list and see if these advantages will improve your company’s long term prospects; however, don’t forget to ...

Tip of the Week: How are Shell Companies Valued?

A shell company is a company with no or nominal operations, and with no or nominal assets or assets consisting solely of cash and cash equivalents. To identify and value an appropriate shell for a specific company’s purpose, it is necessary to understand six important characteristics of the shell. These give the prospective buyer a ...

Tip of the Week: Need a Reverse Split? Avoid a Merger Proxy

When a public shell is in the process of completing a reverse merger it often finds itself with too many issued and outstanding shares or not enough authorized shares. One solution is a reverse stock split. A reverse stock split is a pro rata reduction in the number of shares of capital stock of a ...

Tip of the Week: When does a self-filing make sense?

The following definition is taken from my book: a self-filing is the process by which a private company may seek a public trading market for its securities without an IPO or a reverse merger, by completing its own filings with the SEC either to resell securities held by shareholders or to voluntarily become a reporting ...

Tip of the Week: Due Diligence 3

Most people look for “clean” shells, companies with well-kept, organized records and no history of unsavory activity, but what they get more often are “messy” or even “dirty” shells. Due diligence is extremely important in reverse merger deals to weed out the good shells versus the bad shells. Taking shortcuts in the due diligence process ...

Tip of the Week: Building Post-Merger Support

You’ve done it all—found a shell, completed the long and daunting due diligence process, closed the deal—now what? The following tips, as described in my book, will guide you through the next step, gaining market support. Going public was just the beginning, it’s what you do next that counts! Get a new attitude. Going public ...

Tip of the Week: So Many Issues in Buying a Shell

One topic we simply didn’t have much room for in the book was the mechanics of “purchasing” a shell. Many shell players find shells and acquire a controlling interest prior to identifying a transaction to put in. This is true for both trading and non-trading virgin shells, as both types are flipped, typically for a ...

Tip of the Week: Is the House in Order? Getting Ready to go Public

You’re excited. You have met an investment banking or law firm. They have suggested that going public might be a logical strategy to help your company grow, raise capital, make acquisitions, etc. But are you really ready? Even assuming going public makes sense, are there any barriers that might make it difficult or a slower ...