Reverse Mergers Taking Your Private Company Public Finance Essay - Free Essay Example

Sample details Pages: 7 Words: 1988 Downloads: 9 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? One of the many ways for a small or medium size privately held company to go public and raise additional capital or even acquisitions is through a Reverse Merger. A Reverse Merger is a simple and fast method by which a private company can become a public company. To do this transaction, a private company merges with a public listed company that has no business and with no assets or liabilities (meaning its not functional). Don’t waste time! Our writers will create an original "Reverse Mergers Taking Your Private Company Public Finance Essay" essay for you Create order By merging in such a company the private company becomes public. This publicly traded corporation is called a Shell corporation. This is so because all that will remain of the original company is its structure. The Reverse Merger was established as an alternative to the famous Initial Public Offering (IPO), for companies who want the benefit of becoming public without the complications and expense that the IPO process has. A Reverse Merger is also known as takeovers or RTOs (Reverse Take Over). It is often suggested that the Reverse Mergers is the best option in providing greater access into capital markets, offering the opportunity to utilize its stocks to make acquisitions and even improve the way the company is seen in the eyes of the investment community. There are two types of shell companies used in reverse mergers. Firstly, a public company that has failed which exists just to be sold in order to recoup some of the costs that causes the business to fail. And secondly, th ere are companies that are created directly for the purpose of being sold as a shell in a reverse merger process. These are of less risk because of the unknown liabilities. When the Private Company merges into a public company it gains the majority of stocks, which is usually 90%. This company must first get approval from the majority of its stockholders for a merger with a public corporation. Then the company will proceed to change the name of the public corporation which is usually a dominant one, sometimes to its own name and restructure its management board of directors. This new public corporation will now need a base of shareholders that is enough to meet the 300 shareholder requirement to be admitted on the NASDAQ Small Cap Market. The SEC also recently stated that if you will want to go public with a shell, you will need financials that are audited and the equivalent of registration statement within 4 days of the merger. Thus there may be no need for public shells, and it will now take longer if you use it. A process of adopting the New Securities Act Rule Reform and trading on the Pink Sheets is suggested for using to go public. It is said to be less expensive. However, I think that this just means that there are other new alternatives of going public in the making. Even though SEC does not account for the statistics of the number of companies that goes public using the reverse merger, the amount is believed to be hundreds per year. (Stated by: RCW Mirus Technology). There are many benefits of going public via reverse mergers in comparison to IPO. The initial costs are much lower and the extra banking fees for investment is escaped. In addition the time it takes to become public is extremely shorter. After the company is publicly traded, there is a possibility for the company to demand a higher price for offering the companys securities at a later time. There is less stock dilution when you go public via a reverse merger. The process of going public and raising capital at the same time is combined in an IPO whereas these two is disentangled with a reverse merger. A company can go public without raising additional capital! Doing this simplifies going public to a large extent. In addition, where an IPO will require a long and good steady history, a reverse merger earnings history does not hamper the completion of the merger. The ownership control needed is less and greater valuation for the company is achieved. Also the company does not require an underwriter. When a company has gone public through a reverse merger the financial markets starts to make future provisions for that newly public corporation. The market value will be significantly more than a private company that has the same structure, in the same industry. The capital will off course be easier to earn because, the stocks now has market value and can be traded. The public trading price of the public companys securities is used to determine the offer price o f any following public or private securities offering. Since stocks are now publicly traded acquisitions can be made. These stocks are seen as currency for acquisitions and mergers. The new company can also receive proceeds from the active use of warrants, if the warrants are included in the stock dividend distribution. Basically, reverse mergers are more appropriate for companies that dont need capital soon, and is willing to wait until it reaches its potential growth and level, when it will be successful as a public unit. They will need a minimum of $20 million or $ 2 million of sales and earnings respectively to reach its peak. Reverse mergers can be best used to finance from the development of products to providing capital needed to enhance working needs. Again, comparing reverse mergers to IPOs, fees and expensed in this regard is not so high, and deals are completed for $50,000 to $100,000, which is probably about 25 percent of the costs that companies who do IPOs have to t ake out of their own pockets to add to their exceedingly costly transactions. However the company thats acquiring the private company may give up 10% to 20% of its equity. This part is remarkably expensive for the private company. Why? This is because the company is really giving up ownership just for the sake of becoming public. Essentially the first steps to take when doing a Reverse Merger are: Find a shell company- can be done by contacting an attorney from a law firm that deals with securities. Another alternative is an accountant. Those controlling the shell companies usually try to keep the financial statements in order, making the account aware of shell company. Also there are financial consultants that can be contacted because they have shells that they will give if requested. However, there is a cost attached. The consultants may want to become minority shareholders in the new company, holding 2 to 5%. Devise a Financial Strategy A reverse merger is an indirect w ay of raising capital, therefore, entrepreneurs must think of how more capital must be raise after the merger is completed. The exercise of issuing warrants, where the common shares are not registered, would need a brokerage firms help. The merger also must be done where $1 million does not have to be paid as registration requirement. Have a good Image companies embarking the reverse merger transaction should follow these steps to promote their new company; Hire a national accounting firm. They make investors, traders, and regulators feel secure. Thats why they charge so much. Hire a prestigious law firm; if the attorney that originally helped in the reverse merger transaction is a professional in these kinds of deals, he/she should be kept or the law firm for which he/she belongs. This is because when the investors and brokers are deciding if to join your offering or not, they will look at such things, to know if to trust your company or not. Use clean shells; as was mention ed before some shells are created to use in merging private to public company they have no successor entity, leaving more blockage for business failure. Caution Dont be greedy there is no incentive for other investors to get involved, if only internal parties benefits. Therefore, at least 2 percent of the company should be owned by the public leaving 98 percent to be controlled by owners of the private company that has just gone public. It is possible to structure the merger that way. Here are the Pros and Cons of going public using Reverse Mergers. The Advantages of doing so would be that less time is taken to complete the deal (3 6 months minimum). It saves money. Total costs will be $100,000 to $300, 000, and no underwriter fees or commissions. The legal work is less compared to an IPO and there are no disturbances. Private fund raising can be completed before the registration. Public fund raising can be initiated after the original registration is finished this can make you receive money at a higher value. Acquisitions can be made for public stock after company starts trading. Debt can be converted to equity using stock. Any type of company can complete a merger does not have to be a male/female dominated industry. Offers the liquidity of investors buying and selling stock original investors have a way out of the investment. There are incentives that management use to attract and motivate employees, such as bonuses via stock/options. The existing private company and its shareholders would have control and own the major ity of the public company. Growth is achieved by acquisitions using stocks instead of cash or using it together with cash. There is estimate planning that helps established stock values and monitor it easily. In relation to foreign companies reverse mergers are a simple way to get control of US publicly traded company, without getting US tax. The Disadvantages surround confidentially, public reporting, dilution, time involvement, liability and expense. For instance, to become publicly held total financial disclosure is required. Reporting expense is more due to need for disclosure. A percentage of equity is let go by the owners. Managers must now dedicate more time to public company operations. More visibility for the company carries with it greater level of liability exposure. The cost for legal and investor relations and regulatory audit becomes high. Other needs that are required will be a comprehensive business plan to show would-be investors. A strong management team w hich public investors demand, a market plan that proves good sales growth and the product or service should show some potential for growth. In addition a financial statement that is qualified by SEC for the past fiscal year and a legal advocate that can handle regulatory compliance. Caribbean countries can enter the public market in a variety of ways, which include trading stocks, bonds and other securities. These being, the Caribbean Stock Exchange, Eastern Caribbean Securities Exchange (ECSE), The Trinidad and Tobago Stock Exchange Limited (TTSE), Bahamas International Securities Exchange (BISX), Securities Exchange of Barbados (SEB), Bermuda Stock Exchange (BSX), and Jamaica Stock Exchange (JCSD). The Eastern Caribbean Securities Exchange is a regional securities market established by the Eastern Caribbean Central Bank and licensed under the Securities Act of 2001, which is a standardized regional body of legislation governing securities market activities. Its the first reg ional securities market in the western hemisphere. The ECSE is design to facilitate the buying and selling of financial products, including corporate stocks and bonds and government securities, for Caribbean countries such as, Grenada, St.Kitts and Nevis, Montserrat, St. Lucia, Anguilla, Dominica, St.Vincent and the Grenadines and Antigua and Barbuda (source:www.esceonline.com). There is also the regional Stock Exchange. Involved countries are Barbados, Jamaica, and Trinidad and Tobago. In the regional stock exchange, any transaction of the exchange that is done locally is settled in their currency and those internationally in US$. Trinidad and Jamaica are the only ones with tickers locally. No system is placed for out of the region trading. However, stocks can be bought from Jamaica licenses to take part in the exchange. Local regional companies are the only ones listed, but other companies who qualify can join. Private companies transfer to publics ones by offering a percentage of their securities to the general public, and at the same time enlisting on a securities stock exchange such as ECSE or NASDAQ.

Reflection Paper - 1450 Words

Julia L. Garcia 1-19 THEOLOGY REFLECTION PAPER 1. What is the personal message/meaning of the creation stories from you? Since I was a little girl, I was fascinated with the story of creation in Genesis. I must have been six or seven years old when I read it for the first time from the old Bible of my uncle. I remember being absolutely awestruck by the great power of God who ordered and things came to be. At that time, I imagined the author of the Biblical text as being an eyewitness to the creation and faithfully reporting of what he had seen. The first chapters of the Book of Genesis reflect on the mystery of God, the creator of everything that exists, the creator of heaven and earth. Everything that is, exists because God had†¦show more content†¦More often the action is much more common, though no less challenging: forgive an offense, repair a broken relationship, and resist temptation. These are works of faith and we are called to the serious business of faithful living every day. Our faith may not be perfect, but we have one who perfectly embraced the goodness and faithfulness of God. Je sus did that for us, and sends us the Holy Spirit so that we may embrace his forgiveness when we fail and live in his grace and power through obedient faithfulness each day. 3. What can you learn from the example of Abraham, Isaac, Jacob, Joseph? What I learned from them is the value of obedience. We must always obey what God wants us to do because He knows what is best for us. I also learned that God will always find a way for us to be happy; He doesn’t want to see us suffer. One proof of this is when he liberated the Israelites from the Egyptians. God used an instrument to free them and he asked in return for their faith in him. So from that, I can say that God never lets us face our problem alone, he uses instrument in other forms to help us deal with our problem and in return, he just wants our endless faith in Him. And he also wants us to love Him unconditionally. 4. 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Marketing Syllabus Spring Free Essays

The student will then have ten (10) days to respond in one of the following ways: Sign the form and request a meeting with the Academic Dean to discuss the allegations and or proposed sanctions; Sign and return the form to the Academic Dean accepting responsibility for the violation and agreeing to the recommended sanction(s); If the student fails to respond within thirty (30) days, a hold will be placed on the students account and the right to participate in the resolution of the allegation will be forfeited. Formal Resolutions: If the alleged violation could result in the suspension or dismissal from the university, or if the student or faculty member requests a formal resolution, the Academic Dean will notify the faculty member and the student(s) that a formal hearing of the Academic Dishonesty Committee will be convened. The committee will be comprised of seven (7) full time faculty members to be appointed by the Vice-President for Academic Affairs on an annual basis. We will write a custom essay sample on Marketing Syllabus Spring or any similar topic only for you Order Now The Academic Dean will serve as chair and will not have voting privileges. The Vice-President for Student Development will serve as an ex officio member of the committee. The Academic Dean will schedule a hearing in a timely manner and all parties will be notified often and location. If the accused student requests, the Academic Dean will assist the student in securing a member of the university community to advise and assist the student in preparing for the hearing. All parties will have the opportunity to present his/her evidence to the committee. The documents, testimony and record of the hearings will be confidential. Upon completion of the testimony, the Committee will meet in closed chambers and vote on the disposition of the student’s status at the university. Penalties: Depending upon the intent and severity of the violation, a student found responsible for any act of academic dishonesty will be subject to one or more of the following penalties: The student is placed on academic honor probation until graduation. For any student on academic honor probation, a second violation will result in a minimum sanction of one semester of suspension from the university. In addition to academic honor probation, a student might also receive a grade of â€Å"F† on the assignment or test; students might also receive an â€Å"P’ in the course; or be suspended or dismissed from the university. No provision will be made for the student to receive a â€Å"W† regardless of whether the professor or student initiate said request. If the student receives a grade of â€Å"F† for the course or is suspended or dismissed from the university, the transcript will indicate the grade with â€Å"HP† and/or the notation â€Å"Academic Honor Suspension (Dismissal). † All students found guilty of academic honor violations shall have a written letter detailing the violation and sanction placed in their permanent record. Copies of this letter will also be sent to the faculty member of the course, appropriate College Dean, and to the Vice-President for Student Development. Appeals: A student may submit a written appeal of a guilty finding to the Vicissitude for Academic Affairs within ten days of receipt of the original decision. Appeals must be based on new evidence, additional information, or procedural errors or misconduct. The Vice-President’s decision is final. 4) Exam Policy: The administration of a final examination prior to the date designated is considered a violation of University policy; therefore, no final exams for this course will be given other than on the specified day and time without the express approval of the Dean of the College of Business and Management. Such exceptions may be given for only the most extreme and sensitive cases. Other than such exceptions, no â€Å"make-up† examinations shall be administered. It is essential that each student plan accordingly, especially regarding post-term travel plans. 5) Accommodation Statement: â€Å"Lynn University makes reasonable accommodations for qualified students with documented disabilities under the Americans with Disabilities Act (DAD) and Section 504 of the Rehabilitation Act. If special accommodations are needed, please contact the DAD compliance Officer at 561-237-7069 or shearn@lynn. Du to assist in commenting and defining those needs. Accommodations are not retroactive therefore, for any accommodation the instructor must be presented with the form specifying the needs. The Academic DAD Specialist is located in the Green Center. 6) Incomplete Grade: A. For a student to be eligible to receive an incomplete for a course: 1) The student must provide to the dean of students documentation of the extenuating circumstance(s) that prevent him/her from satisfying the course requirements and learning outcomes of that particular course. 2) The student, at the time of applying for an incomplete, must have employed 2/3 of the term and have a passing grade. B. The application process: 1) The student will have the option of applying for an incomplete in one or more courses. 2) The student will obtain and complete the incomplete application form and bring it to the dean of students with appropriate documentation. The dean of students will verify that the student’s application satisfies the eligibility criteria. If the application satisfies the eligibility criteria then the dean of students will return the approved form to the student who will then take the form to the professor of the course. The professor and student will draw out contract, which includes but is not limited to: all coursework to be completed and the deadline for this material to be submitted. After the student agrees to the terms of the contract and signs the form, the professor will take the contract to the dean of his/her college. The dean will then review the contract and sign the form upon approval. The â€Å"l† is now official and the contract is binding. The dean of the college will distribute copies of the contract to the professor, the student, the dean of students and the Registrar. Each recipient will place the copied contract in the appropriate file. The roofless will keep one copy and the original will be placed in the student’s file in the college of his/her major. C. The form: 1) Will be available online. 2) Will contain current grade, what specific assignments are to be completed due date for all material (not to exceed One year beyond the original term final grade due date), and state that the final course grade will be a ‘W† if the student does not complete the requirements. 7) Withdrawals: Students are limited to eight undergraduate and three graduate course withdrawals. ) Assignments: Papers must be submitted ONLY through the Assignment link n Blackboard. For assistance with Blackboard, contact the IT Help Desk at 561-2377979. Late papers will not be accepted without penalty without the prior consent of the professor. Extensions may be granted on an individual basis and will only be granted for particularly sensitive cases. The grant ing of makeup papers shall be at the sole discretion of the professor and will not be given except for particularly sensitive cases that are discussed at length with the professor. In any group project, the student is expected to become an integral team member, with active input, interaction, and contributions. Once mea members have been selected, it is the responsibility of the team to agree upon the work assignment and allocation of team resources. A student who does not completely follow through with that student’s commitments to the team will not receive a passing grade for the project. 9) Dress code: For all activities in the classroom that involve a guest presenter, as well as for field study visitations, the student shall be required to dress in business casual attire. If the instructor determines that the student’s appearance is inappropriate for a scheduled activity, the student will not be permitted to participate. 0) Questions and concerns: Students who have concerns or questions regarding academic matters relating to this course are urged to consult with the instructor. Students should be familiar with information found in the current Lynn University Academic Catalog. Required Texts Articles, Videos, and e-mails throughout the term as provided by the professor, including postings on this course’s Blackboard companion site. Suggested Reading and Sources (1) Street Smith’s Sports Business Journal, subscription available at www. Superciliousness’s. Com Course Requirements Each student will complete all assignments and is responsible for Discussion Board postings on Blackboard. Details about each of these projects are attached to this syllabus. You may complete any assignment in any order you please. Try to complete one project every two weeks, and to complete your Discussion board posts on a Weekly basis. All work is due by Friday Feb. 27 at 1 1 :pm properly posted in Blackboard. Grading Grading is based on the following system: Deal Maker USB LOC Discussion Board USB Advertising USB Launch Party Total 20 points 100 points Grades for each of the factors listed above will be posted progressively throughout the semester, and will be accessible to the student through the university online Blackboard system. Student final grades shall be rounded by tenths to the nearest whole number. A grade of exactly one-half point shall be rounded to the next highest whole number. Student grades shall not be rounded by hundredths to the nearest tenth. How to cite Marketing Syllabus Spring, Essays