Public shell reverse merger is a viable alternative to going public
Public shell reverse merger transactions are a widely accepted, alternative mean for a private company to go public. A necessary component to a completed reverse merger transaction is the public shell. The public shell is a publicly listed company with no assets or liabilities. It is called a "shell" considering all that exists of the original company is its corporate shell structure. By merging into such an entity, a private company becomes public.
The primary benefits of doing a public shell reverse merger, as opposed to an IPO, is the following:
- You will receive a higher valuation for your company.
- The company does not require an underwriter.
- The costs are significantly less than the costs required for an initial public offering.
- The time required is considerably less than for an IPO.
- IPOs generally require greater attention from top management.
- There is less dilution of ownership control.
- While an IPO requires a relatively long and stable earning history, the lack of an earning history does not normally keep a privately-held company from completing a reverse merger.
- The costs associate with a public shell reverse merger are significantly less than with a traditional IPO.
- A shorter track record is required for companies going public with a public shell reverse merger than with an IPO.