Blank-Check Company
A blank-check company or shell company is a publicly-listed company that does not have any operations or revenues.
It is a shell company whose purpose is to offer its shares to the public, raise money, and develop a business. In most cases, it seeks to merge with or acquire an operating business. Many privately-held businesses merge with a blank-check company because it’s faster and less complicated to go public in this way. Otherwise, the private business has to take the traditional route of filing a prospectus and undertaking an IPO which is longer and more complex.
Many privately-held website businesses go public in this manner by a reverse merger into a shell company. In this case, the shareholders of the website business transfer all of their shares to the publicly-traded shell company in return for shares of the shell company. In this simple way, the website business is merged with the public company and the shareholders in the website business become major shareholders in the public company.
Author: Kris Tabetando
Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.
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