Why Reverse Mergers Are A Bad Choice For Most Businesses
Many middle-market businesses ($1 million-$25 million) have used reverse mergers as a low-cost means of listing on capital markets. Experience has shown that for most middle-market businesses there are other strategies that are both less expensive and more effective in achieving this goal. Reverse mergers are a business technique that permits companies to gain access to capital markets by merging with an existing, listed company. It is often chosen as a less-expensive way to enter the market than an Initial Public Offering (IPO), even though there are other alternatives that offer both the capital acquisition of an IPO and the lower cost of a reverse merger.