Reverse Merger: Have They Taken the Reverse out of Reverse Merger?

Are the promoters and consultants destroying the market for Reverse Merger? First lets take a look at reverse merger. In a Reverse Merger, an operating private company merges with a public company that has little or no assets, nor know liabilities (the "shell").

In some rare instances, the shell may have some amount of cash remaining for investment in the new enterprise. The public corporation is called a "shell" since all that exists of the original company is its corporate shell structure and shareholders.

The private company owners obtain the majority of the shell corporation stock (usually 90-95%) through a new issue of stock for the private enterprise or assets.

The public corporation will normally change its name to the private company's name and elect a new board of directors which will appoint the officers.

The public corporation will usually have a base of shareholder sufficient to to meet the 300 shareholder requirement for eventual admission to quotation on the NASDAQ Small-Cap Market, Or some other market.

Now to the problem or the devil is in the details: The private company goes out perform the proper due diligence on a "shell" after finding it to be clean, and with no adverse past history to disqualify it, goes ahead completes the purchase.

After paying an astronomical price, say in the neighborhood of $500,000.00- to 700,000.00 for a Bulletin Board shell they get 90-95% of the stock.

Not only is the price extravagant, he will also take the reverse out of Reverse Merger, by insisting on a stipulation that you won't do a reverse split and reduce the number of shares outstanding. By reverse splitting the shares you are reducing his 10%. Which was the original intent of the reverse merger.

What a bargain $500,000.00 or more for 90% of nothing and it gets better, Lets say the company has 300 shareholders and those 300 shareholders collectively own 500,000 shares and in some cases more, and the shell has 30,000,000 million shares outstanding which the owner(s) of the shell get keep 10% or 3.000,000 share. I am using the old math not the new.

After the market maker files and the company is trading on the Otcc Bulletin Board. Your problems begin, lets say friends and acquaintances hear your company is now public and go out and buy some shares driving the price to say $3.50,

now those 300 share holder who received their stock for pennies decide that they have hit the lottery and start selling making it necessary for you to go out and buy stock in the open market.

Now back to basic math, supposing you want to maintain the 3.50 price so you go out and buy the stock. 500,000 x 3.50 = $1,750,000.00 forcing you to go raid the kid's piggy bank if you don't have the spare change.

Now what about the 3,000,000 shares in the hands of the "shell" owner? 3,000.000 x 3.50 = $10,500,000.00, Time to ask the wife for loan.

And don't forget about those astute market makers and trader that are aware of the stock that will be coming out and depress the price of your company's stock.

Being the enterprising individual that they are, they will establish a short position on the stock of your company, after all they are entitle to make a living too.

Before you jump from the Empire State Building make sure there is net down below waiting for you.

Don't get me wrong a reverse merger can be done if you have a consultant that is looking out for you and is not part of the triumvirate (shell owner, securities Attorney and consultant). And in a few cases the same individual is performing all three functions.

I wouldn't recommend for you to go step out in to the mine field without a mine detector, in some of my previous articles I suggested way to check the smooth talking consultants and shell owners before they take you to the cleaners.

Also be aware that there are alternate way to go public the Reverse merger is only one of several option, so don't jump without looking, if you feel that you must do a Reverse merge insist on obtaining all the stock and not a share less.

In order to prepare you to deal with the complexities of the public arena I would have to write a book not an article, but I will continue to try and inform through articles so that you will be prepare if you decide to take the plunge and go public.

There are honest hard working consultants out there, in over 25 years in the business I have personally come across two of them. But there must be more.

If you want to know about the alternatives to a reverse merger get in touch with me through our website: www.genesiscorporateadvisors.com the alternatives may not be cheap but they are cheaper than paying $500,000.00 for 90% of nothing.

The answer to the title of this article is a resounding yes! They have taken the reverse out of Reverse merger.

josephquinones@genesiscorporateadvisors.com

Joseph D. Quinones, President of Genesis Corporate Advisors has spent over 25 years in the securities industry. In 1992 he founded JDQ Financial Group, Inc. and proceeded to build it up from a one man operation to the point where it employed many traders, advised numerous client and generate millions in revenues.

non-toxic cleaning company Winnetka ..
In The News:

Researchers are now showing us that old smartphones as data centers could be the next big thing in sustainable tech.
Scientists have created micro-robots for sinus infection treatment that can enter the nasal cavity, eliminate bacteria directly at the source, and exit without harming surrounding tissue.
Let's examine how your data is collected in everyday life, who is buying and selling it, what happens to it afterward, and, most importantly, what you can do to protect yourself.
Researchers at the University of Sheffield in the U.K. developed small robots called "Pipebots" that can travel inside water pipes to find and potentially repair leaks, all without any excavation.
A groundbreaking new study has uncovered disturbing AI blackmail behavior that many people are unaware of yet.
Four teams of autonomous humanoid robots competed in China's first AI soccer tournament, demonstrating advanced capabilities in ball detection and independent decision-making.
The ID. Buzz autonomous van features self-driving technology with 13 cameras, nine LiDAR units and five radars after Volkswagen partnered with Hamburg and Uber for 2026 deployments.
Social Security phishing scams use urgency and impersonation to steal personal data. Learn how to spot fake SSA emails and implement 10 protective measures.
French startup Pazzi Robotics created an AI-powered pizza robot that made pies in under five minutes without human help, but it closed in 2022 despite patents and expert partnerships.
Reclaim your time from big tech with effective screen time reduction strategies for iPhone and Android, featuring steps to limit app usage and create phone-free zones.
Amazon Prime Day shoppers face threats from 120,000-plus scam websites as cybercriminals prepare phishing traps and malware ahead of the July sales event.
Fox News' AI Newsletter brings you the latest on this rapidly evolving technology.
The AEON humanoid robot tackles labor challenges with Nvidia AI, Microsoft Azure cloud and advanced spatial awareness, working alongside industry leaders Schaeffler and Pilatus.
Google's Ask Photos feature brings AI-powered searches to your photo library, letting you find memories with natural language queries while maintaining privacy controls.
The return of blue book exams emerges as universities fight widespread AI academic dishonesty and educators debate whether to ban AI tools or teach responsible usage.
Signs your phone might be hacked include strange behavior, unauthorized texts, battery drain and pop-ups, while protection involves updating software and avoiding public Wi-Fi.
Tokyo startup H2L has launched Capsule Interface technology enabling full-body robot control with muscle sensors, offering immersive remote operation.
The A.I. industry seems set for growing pains as Big Tech companies scramble for solutions to the medium's unprecedented strain on the power grid.
Fourth of July fireworks cause a 60% spike in lost pets, but GPS trackers and AI photo-matching services like Love Lost can help reunite missing dogs with their families.
Protect yourself from jugging, the rising crime by which thieves monitor ATM users and follow them to steal cash, with six practical safety tips to stay alert and secure.
U.S. airlines like Delta, American and United are selling your domestic flight records to government agencies through the little-known Travel Intelligence Program.
Autonomous robots from Uber Eats are rolling out across U.S. cities, featuring LIDAR sensors, secure compartments and all-weather operation for food and grocery delivery.
Costco has expanded into EV infrastructure with new ultra-fast charging stations that can charge most electric vehicles to 80% in 20-60 minutes while shoppers browse the warehouse.
The new Gemini Robotics On-Device AI allows robots to perform complex tasks without internet, offering enhanced privacy, reliability and adaptability for real-world use.
Protect yourself from Amazon phishing scams by spotting red flags like suspicious sender addresses and spelling errors while using Amazon's Message Center to verify communications.

Self-Employment: Do you know the Difference between Rates and Wages

The difference between rates and wages is not always clear... Read More

Making Your Purpose Your Business Step #2- Getting From Point A to Point B

In my previous article, Step 1, your challenge for the... Read More

Do You Need the Help of a Virtual Assistant?

Running a business, whether large, small or in your home,... Read More

How to Start a Paper Shredding Business

Paper Shredding Business Opportunities are blossoming up everywhere because in... Read More

Effectively Completing the Operations Plan Section of Your Business Plan

The Operations Plan is a critical component of any business... Read More

A Look at Incorporating a Business in Florida

As you may know, there are many ways to incorporate... Read More

Fleet Washing Operations Manual Sample Outline

In the Truck Washing Business every single type of vehicle... Read More

Analyzing Customers in Your Business Plan

The Customer Analysis section of the business plan assesses the... Read More

Competition in the Mobile Car Wash Industry

We have all seen the mobile washing units cruising our... Read More

Local Search and Internet Yellow Pages - A Whole NewVocabulary for Small Businesss

Buyers want both online and local information about where to... Read More

Six Essential Skills to Business Success!

The following are six essential skills to business success. You... Read More

More Rules for Franchising?

The FTC- Mighty Federal Trade Commission has unilaterally decided to... Read More

How to Write a Credit Policy for Your Business

The book, "Become the Squeaky Wheel," by New Hampshire author... Read More

Aircraft Washing Service Operations Manual

Anyone who is serious about washing aircraft as a full... Read More

Starting an Aircraft Washing Service

To wash an airplane there are many items you will... Read More

Virtual Assistance for Healthcare Professionals

Administrative and clerical tasks are the bane of every industry.... Read More

There Is Security in Change... But Use Caution

It has been said that the only constant is change.... Read More

Business Reviews that Work

What is the satisfaction & expectation review of the business... Read More

Small Business Savvy: Reaching Key Big Business Decision Makers

As a solo entrepreneur or small business owner, one of... Read More

Entrepreneurs Ask: What Can a Virtual Assistant Do For Me?

Great question!Freeing your time is an indisputably key element in... Read More

Arent Small Businesses Lucky?

Why? Because they have access to world class public relations... Read More

Cleaning Grain Silos, Towers, Containers, and Combines

If you run a pressure washing company in a rural... Read More

Direct Mail - For Small Businesses

We hear a lot of talk about junk mail nowadays.... Read More

Hiring A Virtual Assistant Can Help Your Business Grow

Are you a home or small business owner and you're... Read More

Self Serve Car Washes in the United States

In the 2003 Auto Laundry News Survey it was determined... Read More

experienced cleaning professionals Glencoe ..