Shell company financing works in two ways. In abounding cases, the shell corporation is created from scratch. The aim of these shells is to lift almighty dollar and to amuse a figure of shares a-1 into the publics hands. In most cases, the shares are sold in units. That is, the shares are sold as one share of accepted stuck plus warrants at the current offering price.
The empty shell is then merged with the operating company. The merged companies activate to report operating results and when the results are acceptable, existing stockholders exercise their warrants and accommodate needed chief into the company.
A second type of shell corporation is formed when the company seeking chief identifies an existing shell or inactive public company (IPC) as a candidate for a reverse acquisition. This typically occurs after a public company emerges from bankruptcy. At this age it may be void of assets other than cash. In actuality, the principal asset of the IPC is its generally its public registration and a roster of shareholders from which advanced chief may be raised.
Shell corporations are a abrupt and cost able road of captivating a company public and raising public chief. However, typically bridge chief is required to finance the action and booty the company to a point where investors are absorbed in exercising their options.
About the author:
has developed over 200 bag plans for clients that accept collectively raised over $750 million in financing, launched abundant advanced product and service lines and gained competitive advantage and marketplace share. GT Bag Plans is the sister site of
Originall posted November 13, 2012