Take Your Organization Public: Reverse Mergers, A Painful Lesson
So, your company is prepared for that subsequent step and you’ve decided to take the dive into the planet of public offerings and worldwide fund raising. You envision investors waiting with bated breath for your organization to announce it really is share price and release shares for purchase. You happen to be imagining swarms of broker dealers clambering and falling all more than themselves to market your stock to their massive investor database while you sit back and fill your company’s coffers with millions in capital that will launch your corporation into the realm of superstardom and hemorrhaging expansion. You start off to search the internet and come across ad right after ad that promotes the thought that you could save $ one hundred,000’s if you acquire a public shell and reverse merge your company with it, saving you time and income, resulting in achieving a public structure in only a few weeks. Purchaser beware!
Reverse mergers into public shell companies is a method that hardly ever operates and if, by some act of God, it is effective you nonetheless have countless problems to deal with that could crush your ability to succeed in an instant. Companies that sell shell firms and facilitate public offerings by way of reverse merger often have several fleas attached to the structure such as the reality that they retain 10% to 25%+ of the company’s shares that they can pump and dump anytime, resulting in a black eye to investors who see your stock plummet, resulting in nearly particular bankruptcy and organization failure.
An additional prominent concern with this variety of transaction is that normally the shell business has a complicated history of litigation and liens that you absorb when you merge and if this is the case you are going to invest all your time in ongoing legal battles as your business bankroll is spent on righting the wrongs of the previous owners. We could go on for days about the downside of reverse mergers into public shells but the moral of this story is, ‘do your homework’.
If you are attempting to take your startup or small organization public, take the additional actions (you’ll truly save cash) and look into OTCBB, a genuine, swift and long lasting way to take your business public without having the drawbacks and definite complications of reverse mergers. You can take your organization public by way of OTCBB for much less than $ 100k and there are normally a number of ways to finance this procedure so you have minimal out of pocket expense.
Going public is straightforward when you group up with the correct consultants that will assist you bypass the dead ends and ideas that will take up your time and cripple your resources.