Sunday, October 21, 2012

How To Take Your Company Public, Reverse Mergers and Public Shell Companies

Today I got yet another email, unsolicited of course, from a guy claiming to have a unique angle with shell companies and he could reverse merge a company into a shell and have it trading in 30 days. My first instinct was to just laugh it off as shell scams are a dime a dozen but this guy was persistent so, against my better judgment I got on a call with him and his 'partner'.

Like a broken record he kept interjecting 'we're the best', 'we're the best' (though they never did actually answer any of my questions). They had shells that they set up and charge $200k and retain 10% equity, yeah right! What legitimate company would even entertain a proposal like this with a shell? By the end of the call they admitted that they have never done this. They have never had an opportunity to use this 'unique' process to take a company public but give them $200k and they can experiment on you and if they lose your money, no problem, they'll just change their website, company name and do it all over again, it's the name of the game in the shell scam industry. Chinese companies are the easiest target and after that, any company in the US that wants to take short cuts is prey.

Here are the facts, reverse mergers almost never work and the legitimate mergers are done when an entrepreneur owns the shell and wants to merge a profitable and stable company into the public shell and retain an equity position and many times those deals are not only impossible to find but the terms are horrendous for the company merging into the shell.

A direct filing via S1 is the only way to go on the OTCBB, don't fall for scams and if you are doing a direct filing, make sure the attorney or consultant you are using offers a complete turn-key solution complete with corporate structuring, globalization, strategic alliance facilitation, legislative tie in, etc. Don't forget your PCAOB audit and 15c211 filing and be prepared for a massive IR campaign with a PR build that starts 3 to 4 months before you're even public.

Don't be a chump! Don't put yourself out there to be taken advantage of by predatory scammers and con artists. Going public can be incredibly rewarding as long as you do it properly without falling for short cut lies. Do it right the first time and your problems are over!

James Scott is the CEO of Princeton Corporate Solutions, a corporate globalization and political strategies firm, PCS offers a unique blend of think tank, corporate and governmental communication strategies to expedite the facilitation of long lasting relationship building in these necessary sectors.

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