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Article

Возможности обратных поглощений специально созданных компаний

In most cases private companies become public through the initiate public offering (IPO). This process can take from one to three years, the level of expenditures is usually very high as well as the amount of information that should be disclosed. Mentioned factors along with other difficulties of IPO process resulted in emergence of alternative way to go public through reverse merger, when the private company acquires 90-99% of public company in exchange for 100% of its own shares or assets. This mechanism allows the private company to becomes public without IPO. Reverse merger transaction can take about 3-3,5 months and is available for larger number of companies due to its comparatively lower costs that can amount to $50.000-$100.000. Information disclosure requirements are less strict than during IPO, that is why reverse merger can be considered as a good alternative for those companies that for some reasons can not conduct IPO. Reverse merger mechanism is not a modern invention. This way to go public was popular in USA in 1980th and then in 1990th during the well-known internet-rush. Current increase in the number of reverse mergers transaction is connected with growth of investments in emerging markets along with growth of IPOs by companies from these markets on leading world’s stock exchanges. АУДИТ И ФИНАНСОВЫЙ АНАЛИЗ 4’2007 2 The result of reverse merger transaction is usually connected with change in status of the company from private to public and doesn’t imply fundraising process for private company. In case the company needs additional financing it can find such public company for the merger that already possesses sufficient amount of cash. Several exchanges in USA, Canada and UK have adopted programs that facilitate fundraising through IPOs by special companies that can be used further in reverse merger transactions. The program at Toronto stock exchange is aimed at creation of «capital pools companies» (CPC), firms of the same type in USA are called «blind pools» or «blank checks», and at London AIM market they are known as «cash shells». A survey that analyzed CPC companies in Canada has revealed the fact that shares of only 5% of such companies were actively traded after their IPO. Low liquidity of the majority of other shares resulted in difficulties with attraction of additional financing. Of 1300 CPC companies that conducted IPOs since the beginning of the program in Canada only 129 firms (about 10%) have entered more reputable stock exchanges and raised totally about $3 bln. Regulations of CPC companies at Toronto stock exchange have been recently changed and currently allow these companies to enter into reverse merger transactions with foreign private firms. Thus, Russian private companies now have an opportunity to enter Toronto stock exchange without long and costly IPO process. Due to increase in popularity of emerging (market) among investors, Russian companies have good chances to be noticed by them after reverse merger and enjoy further value growth.