CHAPTER 10The Future of Reverse Mergers
It certainly appears that, absent a dramatic change in the regulatory environment and investor perceptions, there will not be a return to the heyday of legitimate shell mergers that we saw in the 1990s and 2000s. The China scandals and imposition of seasoning requirements have significantly hampered the interest in this technique. As indicated earlier, however, advantages to these transactions remain in certain situations.
As we also have noted, part of the reason for this decline has been and will be the increasing attractiveness of a Reg A+ IPO as a more appropriate front‐door alternative to a traditional IPO for many companies. The facts that total transaction costs are very similar in both and that a Reg A+ deal will not take much longer than a reverse merger are major reasons many believe Reg A+ will supplant most of what would have been shell combinations.
The true test of this thesis may not come until the next bear market. As of this writing in fall 2017, the stock markets have been enjoying continuing record highs amid a slowly but steadily growing economy. There also remains continuing hope among investors, despite the looming Russia scandal and failure to pass a repeal and replacement of Obamacare, that President Trump will succeed in his goals to enhance deregulation, pass tax reform, tackle our infrastructure problems, and strengthen trade.
Will Reg A+ IPOs be tied to the overall IPO market or be more like reverse mergers, ...