Put It In Reverse
Are there too many twists in the road to IPOs? Consider a smoother route: reverse mergers.
Tough initial public offerings are perhaps the most sought-after
form of financing, the fact is, surprisingly few companies can hope
to negotiate their way through the tortuous process.
This truth leads to a nasty Catch-22. Many promising small
companies cannot obtain funding because they are private. However,
without funding, they can't hope to grow to the size that would
allow them to go public.
Why is being a private company anathema to the capital-formation
process? Because many investors believe that even if the company
does well, without an exit strategy to get their money out,
they'll never realize a substantial return on their investment.
There might be some merit to this thinking; however, the other side
of the coin is that a patiently funded company that realizes its
true potential has numerous options for rewarding its
shareholders.
Content Continues Below
If you're convinced going public is the best way to find the
funding you need, there's an alternative to the typical IPO
that's less burdensome and may be equally lucrative: a reverse
merger. In a reverse merger, a private company acquires an already
public, though typically dormant, company and becomes public as a
result. Though completing a reverse merger is only the first step
in receiving funding as a public company, it can lay the groundwork
for substantial capital growth.
Art Beroff co-writes Entrepreneur's "Raising
Money" column. Dwayne Moyers is the founder of Cummer Moyer
Securities investment brokerage and management company. He has
advised numerous emerging companies on financing strategies and
options.
Page 1 |
2 |
3 |
4 |
5 |
6 |
7 