Reverse Merger:

A reverse merger, also known as a back door listing or a reverse takeover, is a business deal where a privately-held corporation becomes a publicly-held corporation without going the usual path of filing a prospectus and holding an initial public offering (IPO). Instead, the transaction is accomplished by the shareholders of the private company selling all of their shares in the private company to the public company in exchange for shares of the public company.

The deal is technically a takeover of the private company by the public company, so it is called a reverse merger because the public company involved is typically a "shell" (also known as a "blank check company", "capital pool company" or "cash shell company") and it typically issues such a substantial number of shares to acquire the private company that the former shareholders of the private company end up controlling the public company.

Special Purpose Acquisition Company (SPAC):

A special purpose acquisition company, or SPAC for short, is a publicly listed vehicle intended solely for the acquiring a preexisting business. SPACs can either be developed in a fashion that makes them industry-specific or general in nature, and according to SEC regulations, they typically have 18 months to acquire another company. If no acquisition is made in that timeframe, the cash held in trust by the SPAC has to be returned to the vehicle’s investors. If an acquisition is to go forward, 80% of the investors a required to approve it. A SPAC must also utilize a minimum of 80% of funds available to invest in the proposed acquisition company. Typically, SPACs aare fully reporting public companies, and for expeditious purposes are usually listed on the OTB BB. Once an acquisition is made, however, the company often registers for a listing on AMEX, NASDAQ or the NYSE.

 

Public Shell Company:

A public shell company is a company that is publicly owned, but is not currently operating as a business. Public shells are highly desired by companies that wish to “go public” but would otherwise prefer to avoid the considerable expense of holding an initial public offering (IPO).

Blank Check Company:

A blank check company is an organization in a development stage that either has no specific business plan or has indicated its intention to pursue an acquisition with an unnamed company, other entity, or individual. Under rule 419 of the Securities Act of 1933, Blank check companies must be fully registered with the Securities and Exchange Commission (SEC) They are also non-trading entities, but following their merger activity typically trade on the OTC Bulletin Board. Additionally, The SEC does not allow blank check companies to use some of the exemptions from the registration requirements when selling their securities.