Raise Capital With Invert Merger by Wastatile601

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									Raise Capital With Invert Merger
A reverse merger is the procedure of a public company acquiring a private company. The private
company then becomes the master of the public company and in effect is now publicly owned. This is
common with penny stock companies.
When a reverse merger occurs, the name of the open public company is changed to the name of the
private company and usually the officers and supervision of the private company are now in the same
positions with the public company. The private company has in effect joined with the penny stock as
well as taken it above. In many cases, the penny stock was a mere spend prior to having been used
for the merger. The penny stock probably had little or no operations in support of existed to be used
by a private company which wanted to go public without going through the extensive means of an
Initial Public supplying or IPO. The shareholders of the penny stock now own stock in the private
business.
To realise why a company would make route of a reverse merger, let's utilize the example of ABC
company , a computer software company. ABC has earnings of $5,500 ,000 and wants to go public.
Learning the alphabet is put in feel with a shell company who is willing to provide them with a majority
of the stock in exchange for owning a small remaining stake in the company after the merger. The
transaction happens and ABC has been bought by the open public shell for.10 per share. Following
the merger was finalized the company issued a press release that the private company is now public,
the management team is still in place, and there is a huge name change. Buyers realize that this
worthless penny stock now has a company with $5,000,000 in earnings. The company had
10,000,500 shares outstanding and thus the company would today earn.50 every share. In this case,
the stock could move much higher giving a few lucky investors several times return on their funds
within weeks.
At this point, you are able to understand why reverse mergers can be attractive. Purchases like the
above are not always so clean , but keep an eye out for reverse mergers within the due diligence to
find hot penny stocks.
About www.gurucapitalventure.com
www.gurucapitalventure.com will be a consultant for private and open public companies seeking to
increase equity/debt capital for wowrking capital mergers and acquisitions in Asia, Europe as well as
USA. We are not certified brokers. Please be recommended that the information contained may or
may not be complete and is solely for informational purposes simply. This is not to be considered as
an offer to market , hold or the solicitation of an offer to get. Investors are encouraged to seek
opinions by their registered brokers or perhaps financial advisors right after extensive due diligence is
conducted.



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