What is a reverse merger?

A reverse merger is a way for a corporation to change its ownership structure without having to go through the expensive and time-consuming process of doing a traditional initial public offering (IPO). It can also be used for a private company to become publicly traded without having to go through the rigorous regulatory process. Reverse mergers occur when a public company acquires a private company, allowing the private company to become publicly traded without having to issue new stock. The public company is typically a shell company, meaning it has gone public but no longer conducts business operations. It is used solely as a vehicle to acquire the private company. The private company then takes control of the public company, giving it access to new sources of capital and liquidity. In a reverse merger, the private company takes control of the operations, management, and board of directors, while the public company retains its ticker symbol on the stock exchange. In California, the process of a reverse merger is regulated by the California Department of Business Oversight. The company must file certain documents with the department, provide financial information to potential shareholders, and register the transaction with the Securities and Exchange Commission.

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What is a reverse merger?

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