ABOUT REVERSE LISTINGS
A "Reverse Listing" is a method by which a private company goes public. In a Reverse Listing Transaction, the shares of a private company are acquired by a public company and in the process become a public company, obtaining the public company's listing status. If the public corporation is an SEC Reporting Company, meaning it files reports such as 10-K and 10-Q with the SEC, the private company does not go through an expensive and time consuming review process with state and federal regulators because the public entity has already completed the process. Indeed, the entire transaction can close in a matter of weeks, not months and months.
Reverse listings are a viable way for small private companies to become publicly traded. They are often a feasible means for private companies that wish to go public without having to spend the kind of monies and time that a traditional Initial Public Offering ("IPO") would cost or take. In a reverse listing, a public company buys a private company, and in the process of this listing, the private company becomes part of the public company, and thus becomes publicly traded. This paper is an exhaustive information piece that includes the anatomy of a reverse listing, a comparison of IPOs and reverse listings, the advantages and disadvantages of a going public via a reverse listing, examples of companies that have executed reverse listings, and essential data and statistics for companies wishing to learn about reverse listings.
The transaction involves the private and public companies exchanging information on each other, negotiating the deal terms, and signing a share exchange agreement and plan of combination. At the closing the public company issues a substantial majority of its shares and board control to the shareholders of the private company, who pay for the public entity and contribute their private company shares to the public corporation they now control. This share exchange and change of control completes the Reverse Listing Program process and the private company is now public and is listed for trading.
Lion Capital Management Group can help your company go public through a Reverse Listing; or if you are a public company seeking to go private, we can match a buyer with your company.
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