Reverse Merger

One of the options available to small- to medium-sized privately held companies that are looking to raise additional capital or to make acquisitions is the reverse merger. The reverse merger originated as an alternative to the traditional initial public offering (IPO) process for companies that want the benefits of being a public company without the expense and complexities of the
traditional IPO.

In a reverse merger a private company merges with a publicly listed company that
doesn’t have any assets or liabilities. The publicly traded corporation is called a “shell”
since all that remains of the original company is the corporate shell structure. By
merging into such an entity the private company becomes public.