Reverse Mergers
Do I need to do a reverse merger to become public?
No, you do not need a public shell to go public although there are some advantages over doing an Initial Public Offering (IPO.) Reverse mergers are significantly less time consuming and less expensive when considering the legal, underwriting and commission fees involved with an IPO. And good, clean shells are expensive starting at over US$100,000 for a Pink Sheet shell and going as high as $700,000 for an OTCBB shell.
However there are also many drawbacks. If you purchase a shell you are, in reality, buying someone else's failure. The defunct public company that you are merging with may have hidden liabilities, such as pending litigation or badly a damaged balance sheet. As a result, there is more due diligence, more time involved and more costs involved than in a regular merger. However there are good, clean shells available and we do have access to these.
In most cases, though, it’s faster and a lot less expensive to go public on the Pink Sheets, the OTC:BB or the Frankfurt Stock Exchange from scratch rather than using a public shell. Once you’re listed on the Pink Sheets you can always move you company up to the NASD OTC Bulletin Board or NASDAQ later.