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REVERSE LISTINGS STATISTICS
Reverse listings are almost as old as Wall Street. Some big companies have used reverse listings to go public. A recognizable example is Ted Turner's Rice Broadcasting reverse listing, which became Turner Broadcasting Systems.
While the SEC does not keep statistics on these transactions, it is estimated that hundreds of reverse listings take place each year. As compiled by Securities Data Corp in 1998, an estimate of reverse listings over the past decade demonstrates the popularity of this type of transaction as a method of going public.
Lion Capital Management Group has examined over 50 reverse listings occurred over the last 2 years. Below are the public returns since the closing of the transaction.
The overall economy and stock market were not great performers over the last few years either. Still, reverse listings significantly underperformed the broader market. Even in comparison to a more relevant small-cap index, companies fared worse after reverse listings.
But what is important to note is that this happened in the face of an extreme downturn in the IPO market. This year, there have only been a few IPOs, leaving some companies with a Reverse Listing as the only way to go public.
While the returns may not look good, a break-down of the advancers and decliners shows that Reverse Listings can be successful.
Some companies that aren't ready to be publicly traded still undergo reverse listings, which hurts the overall average numbers. But looking at the companies with stock price advances since their Reverse Listings, we can see that with the right company, a Reverse Listing can be quite profitable.
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