Reverse Mergers

An alternative method of “going public” is through reverse merger, which is the acquisition of a public company (shell) by a private company.  Going public through a reverse takeover allows a privately held company to become publicly held at a lesser cost, and with less stock dilution than through an IPO.  In addition, a reverse takeover is less susceptible to market conditions.  Conventional IPOs are risky for companies to undertake because the deal relies on market conditions, over which senior management has little control.  In a reverse takeover, since the deal rests solely between those controlling the public and private companies, market conditions have little bearing on the situation.  The time to market is also an advantage.  The process for a conventional IPO can last for a year or more. By contrast, a reverse takeover can be completed in as little as thirty days. 

The downside of doing a reverse merger is that the purchased shell may not be clean, meaning that it may have pending lawsuits and other unforeseen liabilities.  In addition, reverse mergers don’t introduce liquidity to a previously private company.  MCM Value Management will work with management to assess the pros and the cons of a reverse merger vis-à-vis an initial public offering, and guide the company through the process.  As with taking a company public via an IPO, MCM Value Management will make the reverse merger process appear seamless, allowing company management to stay focused on job one: running the company.