Question

What Is a Reverse Merger?

Answer 1

A reverse merger is a financial transaction in which a private company merges with a publicly traded company in order to become a publicly traded company itself. This process allows the private company to go public without having to go through the lengthy and expensive process of an initial public offering (IPO). In a reverse merger, the public company (also known as a shell company) typically acquires the private company and its operations, and the private company's shareholders receive shares of the public company in exchange for their ownership stake. The private company then becomes a subsidiary of the public company, which is now publicly traded on a stock exchange. Reverse mergers are often used as a quicker and less costly way for private companies to gain access to public capital markets and provide liquidity for their investors.