Most companies start out private. But, if your business is steadily growing, it’s normally time to start considering going public around $100 million dollars in revenue. A reverse merger is one easy way to do that. Here are just a few reasons why.
How it works
The reverse merger is a method used to convert a private business into a public one quickly, easily and inexpensively. The way it works is by having the investors of the company acquire the majority of a public shell company. The shell company can be quickly and easily registered with the Securities and Exchange Commission (SEC), a process that would be more timely and expensive with your existing company.
Then, you can trades shares from your private company for the shell company’s stock. This will bring the private company the benefits of a public company.
First and foremost, going public will encourage more shareholders. The securities exchange benefits of a public company allow your shareholders to liquidate their holdings, rather than buying back their shares. This will make for happier shareholders, which will encourage more shares and more shareholders, making for better business overall.
By using the reverse merger model, you’ll enjoy the benefits of a public company while also becoming less dependent on market conditions. The reason why is because in the reverse merger model, you’re simply converting the type of entity your business, rather than needing to prove that the change will raise capital. Your shareholders won’t be given any promise of change that might rock market conditions and discourage investing.
The conventional initial public offering practice that is otherwise used to make a private company public can take months of planning between managers, an investment bank and the SEC. By contrast, a reverse merger can take as little as 30 days.
If you’re interested in your options for going public, learning more about reverse mergers and how to get them started may be the key to growing your business’ profits and capabilities.