Kohler Capital Management, LLC
Page 2
While a reverse merger will not provide capital to the company, once public, the company has a market for its stock, it has a recognized value, and it has liquidity - all of which are extremely important to the investment community as well as to the world business community.

Should the company seek additional capital, the reverse merger puts control of the capital raise in the hands of the company, not the brokerage firms. This process is flexible and enables the merged entity to negotiate with several underwriters/broker-dealers simultaneously, on far better terms, and from a much stronger position than that of a private company. The now public company has leverage - the exit strategy is already in place.

Instead of asking brokerage firms to take the company public, the merged entity, now publicly traded, is in the position to offer the brokerage firms an opportunity to be part of their capital raise (follow-on offering). Historically, the follow-on offering has actually minimized the risk of the brokerage firms and has also minimized the risk to the investor.

The success in raising capital at this point will depend on such variables as market conditions, the uniqueness of its product/service, the growth potential, the first-to-market, the competition, the management team and the financial circumstances of the company at that time.

There are many well-known companies that have capitalized on this reverse merger strategy to go public. To name a few: Waste Management, Blockbuster Entertainment, Berkshire Hathaway, MCI, Occidental Petroleum, TBS, and just a few years ago, the NYSE Group.

Website Builder