Public shell is a viable alternative to going public
Public shell transactions are a widely accepted, alternative means for a private company to go public. A necessary component to a completed reverse merger transaction is the public shell. The public shell is a publicly listed company with no assets or liabilities. It is called a “shell” considering all that exists of the original company is its corporate shell structure. By merging into such an entity, a private company becomes public.
The benefits of doing a Public shell, as opposed to an IPO, are:
- You will receive a higher valuation for your company.
- The company does not require an underwriter.
- The costs are significantly less than the costs required for an initial public offering.
- The time required is considerably less than for an IPO.
- IPOs generally require greater attention from top management.
- There is less dilution of ownership control.
- While an IPO requires a relatively long and stable earnings history, the lack of an earning history does not normally keep a privately-held company from completing a reverse merger.
The fees associated with a standard IPO are also extremely high. The company must pay for underwriting fees, legal fees, accounting fees, printing costs, and filing fees. WIth a public shell merger, the costs are much less to go public.