The Advantages of a RTO

What’s a Reverse Take-Over (RTO)?

A Reverse Take-Over (RTO) is a type of merger that private companies use to become publicly traded without resorting to an initial public offering (IPO).

An RTO (Reverse Take-Over) allows you to take a short-cut in going public. All you need is an already public company which has become dormant and is inactive with virtually no assets or liabilities. Its real asset is its stock listing status.

How it works

The RTO process is often referred as a “Back Door-Listing” involving a “Shell Company” which is currently trading on the markets.

Shell companies exists as publicly traded company who have had little, if any, recent activity, existing as more of a shell corporation. This allows the new private company to shift its operations into the shell of the public entity with relative ease, all while avoiding the costs, regulatory requirements and time constraints associated with an IPO.

Speed to Market

The process for an IPO can be tedious and long. However, the availability of a listed shell company alleviates the time consuming process on the new owners since the shell company is already in compliance with the rules of the listing manual.

IPO’s can be expensive

A Stock Market listing is not cheap, the final proceeds received from the listing may only be enough for the company to pay for part of its equipment costs. This is part of the reason why reverse takeovers (RTOs) occur. Some companies don’t wish to spend unnecessary money on listing expenses thus RTOs are often a much cheaper option.

*Content sourced for this article by: sharesinv.com, investopedia.com

Roxbury Capital Group enables you to stay focused on what you do best, grow your business and get the Capital you need, Faster.

If you are interested in learning more about the advantages of taking your company public, please don’t hesitate to contact us.

Josh Turk Halifax NS MarketingJosh Turk,
SVP of Marketing
joshturk@roxburycap.com
Roxbury Capital Group, www.roxburycap.com

2018-08-09T17:39:15+00:00