What Is a Reverse Takeover?

A reverse takeover, reverse merger, or reverse IPO is the acquisition of a private company by an existing public company so that the private company can bypass the lengthy and complex process of going public.

Is a reverse takeover good for shareholders?

A reverse merger is an attractive strategic option for managers of private companies to gain public company status. It is a less time-consuming and less costly alternative to the conventional initial public offerings (IPOs). ... A successful reverse merger can increase the value of a company's stock and its liquidity.

Why would a company do a reverse takeover?

Reverse mergers allow owners of private companies to retain greater ownership and control over the new company, which could be seen as a huge benefit to owners looking to raise capital without diluting their ownership.