- Reverse Merger
The term Reverse Merger (sometimes also referred to as Reverse IPO) commonly refers to the acquisition of a publicly listed shell company, i.e. a company without significant assets and liabilities, by a smaller private company. The goal of the private company is to become public and gain access to capital markets without going through the hassles of an Initial Public Offering (IPO). Bypassing a complex IPO process with a Reverse Merger is often criticized, as it may allow companies to get publicly listed, even though they may not yet be ready for this step. Nevertheless, a number of successful companies took this shortcut to go public. Among the most notable examples for Reverse Mergers are Warren Buffett’s Berkshire Hathaway, Texas Instruments and the New York Stock Exchange.