Reverse Mergers
DF's members work closely with the management of public and private companies, their legal counsel and public accounting firms, to achieve the company's goal to become public, either through the filing of a registration statement, or a reverse merger transaction with an existing public company. DF also assists these companies with their corporate management structure, maintenance of corporate books and records, preparation and filing of documents with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) necessary to stay in compliance with public reporting guidelines, the dissemination of press releases, and corporate due diligence in connection with acquisitions.
Why Consider a Reverse Merger?
A "reverse merger" is a method by which a private company can become public. Typically, the private company merges with a public company that most often has no assets or liabilities. The assets and liabilities of the public company is not what is attractive to the private company; what makes the public company attractive to the private company is that the corporate "shell" structure of the public company remains intact, including (1) its registration with the Securities and Exchange Commission, (2) its shareholder base, and (3) its publicly traded stock. Once the private company merges into a shell structure such as this, the private company becomes a public entity.
As a result of this merger transaction the private company typically acquires a majority (usually over 90%) of the public company's stock, changes the name of the public company, and appoints and elects new officers and directors.
The major advantage of reverse merger transactions is the speed with which the merger is complete and the private company becomes a public company. Other advantages include lower associated costs and less stock dilution than going public through an initial public offering (IPO) handled by a brokerage firm. While the process of going public and raising working capital is combined in an IPO, these functions can be separated in a reverse merger, allowing a company to go public without raising additional capital.
The benefits of a reverse merger transaction also include, but are not limited to, the ability (1.) to make acquisitions of other companies using the publicly traded stock, (2.) to attract and retain key management through employee stock ownership plans, (3.) to establish a recognized market value, and (4.) to provide a gradual exit strategy for retiring business owners.
While the SEC does not keep statistics on the number of reverse merger transactions, a recent CNN online article disclosed that industry experts believe that hundreds of small to mid-sized companies go public each year through a reverse merger. We believe that the resurgence of reverse merger transactions is a by-product of the current difficult IPO market that is forcing smaller companies to look for alternative funding channels.
You may have heard of the following companies that went public through a reverse merger: Allied Waste Industries (NYSE: AW), Blockbuster Entertainment (NYSE: BBI), Occidental Petroleum Corporation (NYSE:OXY), Siebert Financial Corporation (NASDAQ-CM: SIEB), and Waste Management Inc (NYSE: WMI), to name a few.
Financial Restructuring
In today's rapidly changing economic landscape every company has to look at what they do, how they do it, and what needs to be done to survive. For some companies, even the most successful ones, cash flow has become a major issue. Often that cash flow issue stems from your Accounts Payable.
The SBA estimates over 40,000 business close or file Bankruptcy a month in the United States and 3/4 fail due to cash flow or sales. During these tough times freeing up cash could be the key to keeping your business from becoming a statistic. Rather than talk about how you have to work on this while your creditors put their plan into motion.
DF will help you by getting your Accounts Payable under control. With proven methods to help reduce accounts payables up to 90% and release all future liability, DF has a simple solution to your accounts payable crisis.
We remove the burden from you and your company of negotiating to get these accounts paid and allow you to focus on making your business successful. DF will also make sure all paid accounts are finalized with no remaining balances or further hassles. All this is done with a minimal one time upfront administrative fee and no future cash fees required. This is what makes our process unique in that your company does not burn additional cash paying us. People often recommend other solutions one of which is Bankruptcy. However due to 2005 Bankruptcy laws put into place this choice has become much more complicated and costly.
Corporate Development
For a new company to become a success in today's economic climate, emphasis needs to be placed on forming strategic alliances in the important areas of corporate investment and marketing. DF can help design a corporate development strategy based on your individual goals and challenges that focuses on building strategic alliance with partners that will add value to your business by offering specific advantages in your marketplace. We will seek to use our existing relationships to assist clients that are seeking arrangements such as bridge financing, receivables factoring, asset-backed lending. We are able to offer our clients introductions and access to lending institutions, and banks that may be able to provide equity, equity lines, and debt for both large and small clients. Very few firms can offer the access, expertise, and targeted corporate financial experiences that DF is able to deliver to our clients.