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What's a reverse merger?

Florida business owners or aspiring entrepreneurs may be interested in the idea of merging businesses. The term "reverse merger" may eventually come up, but what exactly is a reverse merger? How will you know if it's right for you and your future business aspirations and goals?

Investopedia defines a reverse merger as a move where a private company will take on most shares of a public company. The public company will then be merged with the private. In this process, the private entity will also become a public one.

This type of merger is seen as being beneficial because it's relatively straight-forward, as far as mergers go. The process of completion is also considered to be simple, and it's generally cost-effective as well, because the public shell company itself is usually simple. It also allows private companies to go public without raising capital, which is a big benefit.

Reverse mergers can also take place over a period of weeks instead of months. Some cases see them completed in 30 days or less. This is a drastic difference when compared to more traditional methods of a private company going public, where the paperwork and litigation can take months at a time.

Generally speaking, reverse mergers are used as a way for private companies to go public in the most straightforward way possible. As a transfer mechanic, it holds a lot of benefits. It's a good option to keep in mind for anyone looking to go public with their own private company.

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