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Corporate Finance & M&A

Reverse Merger

Also called: reverse takeover, RTO, backdoor listing

A reverse merger takes a private company public by merging it into an existing listed shell. It's faster and cheaper than an IPO and skips much of the underwriting scrutiny — which is precisely why the route has a poor reputation, having been used for a wave of frauds. It also leaves the company with whatever history and liabilities the shell carried.

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