> Reverse Takeover
A reverse takeover, or reverse merger, is when a private firm acquires a publicly-traded company by purchasing its shares. Although this is now a growing practice, it is still recent, and as such not very well-known among company management.
Training
This page is a case study of us assisting a company perform a reverse takeover; if you are looking general details on reverse takeovers, you will likely want to visit our reverse takeover by a listed company page under knowledge process outsourcing.
> Possible Reasons
There are many reasons for which a company may execute this practice, including:
- for raising capital;
- for entering foreign markets;
- as part of a re-branding or 'makeover' strategy; or
- as an exit strategy in case the primary operations of a company fail.
> Background on Firm
We had worked with a firm based in Indonesia on an ERP system implementation, at the end of which the company approached us with the requirement to set up business in Australia. This was for the purpose of obtaining residency therein, for which the company was willing to spend up to $1,000,000 (US). After some analysis, we had determined that the best course of action would be to execute a reverse takeover, due to being the most economical option.
> What We Did
Our research had found a candidate company for the reverse takeover: a publicly-traded shell company listed on the Australian Securities Exchange (ASX). We cooperated with a local law firm, wherein our client bought the shell company, and executed an acquisition of themselves from the shell company. We managed to complete the process in a total of three months at a cost of $150,000—only 15% of the cost our client was originally intending to spend.