Public Shell

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.

onEntrepreneur

onEntrepreneur is an online magazine centered on the world of business, entrepreneurship, finance, marketing, technology and much more. We are regularly updated – sign up with our newsletter to send the updates directly to your inbox.

Leave a Reply

Your email address will not be published.