A reverse merger occurs when a public entity
acquires all of the stock of a private company in exchange for approximately
90% to 95% of the shares of the public entity.
Then the newly merged company takes on the name of the private company,
installs the private company’s directors and officers, and files with the
appropriate regulatory authorities. This
transaction and change of control completes the reverse merger, transforming
the formerly private company into a publicly traded company.