Private companies using reverse process to go public Message Board

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Microcap & Penny Stocks : Private companies using reverse process to go public

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To: P.S.N. who wrote (18)	4/29/1998 10:37:00 PM
From: Chloe R	Read Replies (1) of 62

Yeah, I know. It's hard to get over that 'reverse split = bad, big reverse split = very bad' mentality. I don't look at it that way, though. I'd evaluate how much of the company the shell will end up with. If it's hard to determine, I'd assume the worst - 5% or so. I'd then look at the private company and see what kind of valuation is being put on it. I'd then figure my own valuation (gut feel, no science) or simply half what they (the private company) thinks they're worth. I'd then do the math to see if the shell is worth buying into realizing that it will be diluted down to the 5%, 10%, whatever. This could be pretty easy when you see the shell has a letter of intent or definitive agreement to merge. What I want to know, though, is what strategies can I use to 'roll the dice' on shells that haven't announced mergers - to find that gem before it happens. Very risky, I believe. Could lose everything. Could make a bundle. Clo

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