Reverse Merger

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What does Reverse Merger mean? Read on to discover the definition & meaning of the term Reverse Merger - to help you better understand the language used in insurance policies.

Reverse Merger

Reverse Merger

A transaction in which an existing shell company (i.e., a publicly traded company with few or no actual business operations) acquires a private company with actual business operations. In this situation, the private operating company takes over the public shell company. The value of reverse mergers is that they provide an inexpensive and rapid method of being listed on a major U.S. stock exchange but without the need to go through an initial public offering (IPO). Another advantage of this approach is that it obviates the need to achieve compliance with U.S. securities registration requirements. The end result of a reverse merger is that the private company takes over management of the public company and the stockholders of the private company become majority stockholders of the public shell company.

More Insurance Terms And Definitions

The Merriam-Webster Dictionary defines insurance as:

a: The business of insuring persons or property.

b: Coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril.

c: The sum for which something is insured.

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