What Is a Reverse Merger?

A reverse merger is when a private company acquires a public shell company to bypass the typical, complex process of going public. Instead of dealing with the costly and time-consuming IPO route, a reverse merger allows the private company to simply slide into the existing structure of the public shell, achieving public status quicker and more efficiently. However, this shortcut comes with its own risks, including potential financial instability of the shell company, regulatory scrutiny, or negative market perception. Still, when done right, it can be an effective tool for private companies seeking to raise capital in the public markets.

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