What Is a Reverse Acquisition?

Reverse takeover listing (also known as shell listing) refers to the non-listed company's shareholders controlling the company by acquiring the shares of a shell company (listed company), and then the company reverse purchases the assets and business of the unlisted company, Becoming a subsidiary of a listed company, the shareholders of the original non-listed company can generally obtain the controlling rights of most listed companies, so as to achieve the purpose of indirect listing.

Reverse takeover listing

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Reverse takeover listing

Reverse Takeover Listing (RTO)

Since the reform and opening up, China

Listing in the United States can be divided into direct listing (IPO initial public offering) and indirect listing (Reverse Merger

Comparison between reverse takeover and direct listing

Reverse takeover operation process and related specific considerations

Prepare company English business plan

After the company decides to buy a shell in the US, it must first write a company business plan in English. The content should include: the company's historical background, management team situation, financial situation, product and market analysis, etc.

Provide the company's financial statements for the last three years

Looking for shell companies

To get a successful shell listing, first find a good shell company. A good shell company should have the following:

1) A shell company can have no assets and no business, but there should be no debt or legal proceedings, which is the so-called "clean" shell, otherwise it is not good for the acquiring company.

2) The shell company's qualifications for listing must be kept intact, including the timely reporting of financial resources and business conditions in accordance with the requirements of the SEC, or the US Securities Regulatory Authority may cancel its qualifications for listing.

3) The non-discriminatory company must have enough "public shares" and "public shareholders" in order to be active after the merger. The so-called "public" refers to shareholders who purchased publicly issued shares when they were initially listed.

4. The shell company provided a legal certificate to prove that the company's shares are "tradable shares".

5.Agree on merger and acquisition plan

After finding a good shell company, you can handle the merger and acquisition procedures. The audit of the financial statements of both companies is the most complicated and takes a long time. Next, the two sides agreed on a merger plan to determine equity allocation and payment methods.

The following matters should be noted in the process of determining the merger plan:

1) Equity distribution

A shell company is a listed company, and a listed company has public shareholders, otherwise it is not called a listed company, so a reverse acquisition cannot acquire 100% of the shares of a listed company. The more optimistic the domestic companies in the market (with sufficient themes and good performance), the higher the shares of listed companies.

2) The way to buy shell merger

Buying a shell merger is a "reverse takeover" approach. The acquired company was originally a shell company, but because the shell company is a listed company in the United States, it cannot disappear, so the shell company continues to exist (the name can be changed), but the equity is owned by the original shareholders of the acquiring company. Shell company became its subsidiary.

3) Determine the proportion and timing of the acquisition company's assets and business into the shell company.

6. Make legal documents

After the merger and acquisition plan is agreed, the two parties can prepare legal documents and sign a contract. After completing the acquisition and merger procedures, the acquiring company naturally became a listed company in the United States, and the reverse acquisition was successful.

7.Apply to the SEC

After completing the reverse acquisition procedures and signing the contract, the two parties applied to the SEC for filing and applied for stock trading (OTCBB) to NASD. The next task is how to make the stock price rise.

8. Discuss and communicate with market makers

In order for the newly merged company's stock to rise faster, it should communicate with market makers and negotiate strategies.

9. Negotiate and communicate with financial public relations companies

In order to make stocks rise faster, in addition to cooperating with the original market maker of the shell company and the increased market maker of the new company, it is usually necessary to hire a financial public relations company, which will provide more stock brokers, analysts, institutions Investors and individual shareholders in general pushed them to notice the development of the newly merged company, which aroused people's interest in the new company's stock.

10. When the stock price reaches US $ 4, the right applies to enter NASDAQ (see the attached table for other listing requirements)