What is Reverse Take-Over?

A type of merger used by relatively small private companies to become publicly traded without having to undergo the process of an initial public offer. Initially, the companies exchange information, negotiating merger terms, and signing a share exchange agreement. In the later stages of the merger, the public company or 'shell corporation' (as all that is left of the company after the merger is its organisational structure) issues a significant majority of their shares to the shareholders of the private company. The private company's shareholders pay for the shares by contributing their shares in the private company to the controlled public company.