Interlist Capital

InterList Capital has clean public shells ready for purchase for companies that wish to Go Public via a Reverse Merger Transaction. InterList specialises in DPO and Reverse Merger/RTO transactions for its clients. It is the quickest and easiest method for a small capitalization company to obtain a stock exchange listing and allows the company and its owners to maintain a majority of the stock.

New ventures, start-up companies or existing companies may wish to acquire control of a publicly traded shell corporation to fast track their listing requirements and specific needs. Public shells are usually listed companies that either have little or no operating assets due to a failed business endeavour, a listed company that has not met certain tier or is not up to date on filing arrangements or is a public shell created specifically to vend in a private operating entity.

Buying a Public Shell – Reverse Merger/Reverse Take Over

A reverse merger is a transaction whereby the private company shareholders may gain control of a public company by merging it with their private company. The private company shareholders receive a substantial majority of the shares of the public company and control the board of directors. The transaction can be accomplished in as little as two weeks, resulting in the private company becoming a public company. The transaction does not go through a regulatory review process with state and federal regulators because the public company had already completed the necessary due diligence and regulatory approvals. The transaction involves re-organization of the shell, negotiating terms, and signing a share exchange agreement. At closing the public shell corporation issues a substantial majority or all of its shares and board control to the shareholders of the private company. The private company shareholders purchase the shell and contribute their private shares into the shell company and the private company is now public. Upon completion of the reverse merger, the name of the shell company is typically chanted to the name of the private company and is issued a new ticker symbol that reflects the name change.

Reverse Merger/Reverse Take Over - A "reverse merger" is a method by which a private company goes public by merging into a company that is already publicly traded. The publicly traded corporation is called a "shell" since all that exists of the original company is its corporate shell structure with no operations. The private company obtains the majority of the public company’s issued and outstanding shares (usually 90% to 100%) and will usually change the name of the public corporation to its own name. The new merged entity will then appoint and elect its own management and Board of Directors. By merging into such an entity, a private company becomes public. The cost of purchasing a public shell is from $150,000 and up depending on the status of the shell and what exchange it is listed on. A disadvantage of this method is its costliness, hidden liabilities that may be there and not having any prior relationship with any of the shareholders in the “public float”. These shareholders could start unloading their stock into the market once they see the stock trading again.

Advantages of Going Public Through a Public Shell Purchase

• Increased Valuation: Typically publicly traded companies enjoy substantially higher valuations than private companies.

• Capital Formation: Raising capital is usually easier because of the added liquidity for the investors, and it often takes less time and expense to complete an offering.

• Acquisitions: Making acquisitions with public stock is often easier and less expensive.

• Incentives: Stock options or stock incentives can be useful in attracting management and retaining valuable employees.

• Financial Planning: Public company stock is often easier to use in estate planning for the principals. Public stock can provide a long term exit strategy for the founders.

• Reduced Costs: The costs are significantly less than the costs required for an initial public offering.

• Reduced Time: The time frame requisite to securing public listing is considerably less than that for an IPO.

• Reduced Risk: Additional risk is involved in an IPO in that the IPO may be withdrawn due to an unstable market condition even after most of the upfront costs have been expended.

• Reduced Management Time: Traditional IPOs generally require greater attention from senior management and often times MicroCap or small companies will not meet the stringent requirements from investment bankers that underwrite IPO’s

• Reduced Business Requirements: While an IPO requires a relatively long and stable earnings history, the lack of an earnings history does not normally keep a privately held company from completing a reverse merger.

• Reduced Dilution: There is less dilution of ownership control, compared to a traditional IPO.

• Reduced Underwriter Requirements: No underwriter is needed: (a significant factor to consider given the difficulty companies face in attracting an investment banking firm to commit to an offering.)