..18 Apr 2014 09:32
A reverse merger is also much less influenced by current market conditions as opposed to the more traditional IPOs (Initial Public Offering). An IPO is when a private company offers stock to the public for the first time ever, essentially raising capital while simultaneously filing with the SEC (Securities and Exchange Commission). This is also called a stock market launch, and it can be risky, costly, and take a lot of time to meet requirements and finalize the process. Reverse mergers get the job done much quicker, and at less expense than a traditional IPO.
In fact, most reverse mergers take about thirty days to be completed, as opposed to over a year for an IPO. Many companies choose to bypass the IPO process because market conditions can drastically change in that long timeframe, but they generally stay about the same in the time it takes to complete a reverse merger, a plus for any company considering this route.
Reverse mergers can also help a company finance anything from working capital to product development, although the capital gained from the merger generally takes longer to come in than with an IPO, so there is a tradeoff.