reverse merger.pptx

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REVERSE MERGER



What is Reverse Merger?

Reverse merger is an alternative method for small and medium

size private companies to become public without going through

the long and complicated process of traditional Initial PublicOffering (IPO)

In private company shareholders may gain control of a public

company by merging it in with their private company



In a reverse merger, a private company

acquires a public entity by owning the

majority shares of the public entity (usually

90% or more)

At the close of merger, the private companytakes on corporate structure of the public

entity with its own company name, assets,

officers, directors, management team and

becomes public



Advantages:

Reverse Merger v/s IPO

Lower Cost

Speedier Process

Not dependent on IPO market for success

Less dilution

Underwriters unnecessary



The Four Key Steps to a Successful

Reverse Merger

STEP-1REVIEW CLIENT GOALS ANDCAPITAL STRUCTURE

• Stag Financial's professionals will work with the

client company's management to identify their

short-term and long-term objectives and how they

relate to the client's desire to "go public.“

• In this step Stag Financial will help the client

identify and resolve individual issues that may have

an impact on how the reverse merger will beaccepted in the financial marketplace.



Stag Financial will also help develop a proper capital structure engineered to facilitate the client'sgoals, including future fund raising activities,acquisition prospects, stock options and warrants,

employee stock ownership programs (ESOPs),stock management issues, and so forth.

STEP TWO - IDENTIFY A SUITABLE PUBLIC

SHELL• Depending on the client's goals, strategies and

budget, Stag Financial will help select anappropriate public shell vehicle.

• There are numerous types of public shellsavailable. Some are trading, some are not trading.

• Some report to the Securities and ExchangeCommission while others remain non-reporting.Some even have cash on hand and are looking for

just the right private operating company to conducta reverse merger.



STEP THREE - PREPARE AND FILE ALL

REQUIRED DOCUMENTS

• Unless the client wishes to reverse merge into a non-

reporting public shell such as a NQB Pink Sheet shellcompany, then the client will need to obtain a proper

audit conducted by a licensed public accounting firm.

• Aside from the mandated public audit, conducting areverse merger requires a number of legal documents,

Board of Director resolutions, and state and federal

corporate and securities filings. Stag Financial and its

affiliated legal firms will help the client prepare and file

all of the necessary paperwork to complete the reversemerger process.



STEP FOUR - BECOME A PUBLIC ENTITY

• Once all of the required legal documents have been executed,

filed and seen through to completion, the client will

successfully have taken over the public shell vehicle and

transitioned itself into a publicly traded corporation.

EXAMPLES OF SUCCESSFUL REVERSEMERGERS

In 1970, Ted Turner acquired control of Rice Broadcasting

(WJRJ-TV) in Atlanta, Georgia. Eventually this companybecame Turner Broadcasting and was acquired by

Time/Warner and later merged with America Online. Ted

Turner is now one of the wealthiest men in the world.



In 1996, Muriel Siebert, the first woman to purchase a seat on the

New York Stock Exchange (NYSE), reverse merged her discount

brokerage house, Muriel Siebert & Co., into J. Michaels, Inc., a

defunct, but publicly traded Brooklyn furniture company. The stock has since traded over $70 a share.

In 1999, Tony Robbins, best selling author of "Awakening the

Giant Within", conducted a reverse merger with GHS, Inc.

whose stock soared from $0.75 to over $12 a share.



REFERENCES

Reverse merger,

“http://www.bristolcap.com/id3.html”

• Reverse merger process

“http://www.stagfinancialgroup.com/rmerger.htm”



THANK YOU

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