reverse takeovers and reverse mergers
A reverse merger occurs when one company acquires another company. Reverse mergers can occur for a number of different reasons- the most common reason being that a reverse merger can circumvent the lengthy process of a private company having to go public.
The biggest obstacle in a reverse merger is reorganizing the capitalization of the acquiring company. This process can be lengthy as it requires a number of shareholders’ meetings to come to a consensus on the terms of the merger.
For companies in the blockchain industry, there are additional risks.
Blockchain company mergers face a different set of hurdles as the blockchain industry on average experiences a greater level of market volatility than traditional companies. The other obstacle that blockchain companies face in reverse mergers is the lack of blockchain technology engineers. Although blockchain technology has been around for a little over 10 years, blockchain engineers are difficult to come by.
The third obstacle in a blockchain reverse merger is the valuation of the company being acquired. For instance, valuations are typically based on initial coin offerings and this requires an element of creativity in determining how investors will be compensated. This is also related to volatility and its effect on the valuation of a company.
Despite market volatility, blockchain companies provide ideal opportunities for strategic acquirers as blockchain companies (even newer startups) tend to have some form of market-ready products and services in addition to established technology.
If you are in the process of acquiring a blockchain company, get in touch with us today for a consultation on your options. Contact us at 1-800-930-9986 or email us at firstname.lastname@example.org.