What is a reverse merger?

A reverse merger is a type of corporate law in Delaware that allows a private company to become public without going through the normal process of a typical initial public offering (IPO). In a reverse merger, a private company acquires a publicly-traded company, usually one that is no longer operating. The private company then issues its own stock in exchange for all of the shares of the public company. This allows the private company to become public without having to issue a registration statement with the U.S. Securities and Exchange Commission (SEC). Once the merger is complete, the private company has access to the public markets and the ability to raise capital more easily. Plus, the publicly-traded company usually has a much lower market valuation, which makes it more attractive to a private company. The downside to this process is that the new publicly-traded company is usually much smaller than a normal IPO, since the private company has not gone through the process of raising capital from regular investors. Additionally, the SEC does not provide the same oversight of reverse mergers as it does for regular IPOs, meaning the company may not be as well-regulated as a traditional public offering.

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What is a reverse merger?

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