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Going Public by Reverse Merger
In 1970, with no cash and in an exchange of stock, Ted Turner gained control of publicly traded Rice Broadcasting (WJRJ-TV) using a little known maneuver called a reverse merger. Virtually insolvent, but with a bold vision and control of a public company, he was able to tap the capital markets of Wall Street.
His stock in the former Turner Broadcasting System (TBS) now Time Warner (TWX) is worth over three billion dollars.
In February of 1996, Wall Street's top woman Muriel Siebert, who in 1967 became the first woman to buy a seat on the New York Stock Exchange., took her brokerage firm Muriel Siebert & Co, Inc., (SIEB) public through a reverse merger with J. Michaels, a liquidated Brooklyn furniture company.
The legendary Arman Hammer invested in a public shell company in the 1950's and created an International company with 14,300 employee's worldwide and operating revenue of $10.6 billion in 1996. It's known as Occidental Petroleum Corporation (OXY).
Reverse Mergers bring Public Shell Companies back to life.
Companies usually go public by finding an underwriter and filing a Registration Statement with the Securities and Exchange Commission (SEC).
An alternative method of going public is to effect a reverse merger into a public shell company.
When the reverse merger is complete the operating company that wants to be public is merged into the public shell company. The public shell company is the legal surviving corporation. The name of the public company is changed to the name of the former private company and the controlling shares are transferred to the officers of the former private company. The net effect is that the former private operating company is now public with the same business, officers, directors with its shares being traded on the over the counter (OTC) Bulletin Board or on NASDAQ. The old shareholders of the public shell company also benefit; their old worthless shares now have value.
Reasons to Go Public
The public company achieves liquidity for its shareholders through the OTC Bulletin Board or NASDAQ. Insiders "controlling shareholders" also achieve liquidity under Rule 144, which allows control people to sell, unregistered stock under certain conditions. A public company can use its stock to purchase other companies, collateralize loans or reduce debt in exchange for stock. Employee stock option plans also increase incentive.
The capital markets of Wall Street could open to the company through private placements and secondary stock offerings once the market for their shares is established. Capital can also be raised through Reg S, offerings to foreign investors. Under certain conditions free trading stock can be created to reimburse for services rendered, under an S-8 Registration.
Who is Reverse Merger, Inc.?
Reverse Merger, Inc., specializes in the restoration of defunct public companies, by restoring their reporting and trading status. Thereby creating shareholder equity through the reverse merger process with a private asset based operating company.
If you know of a defunct public Company. Click Here.
If you represent a private operating Company
that would benefit from a reverse merger. Click Here.
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