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Business transactions can change entities from private to public

An initial public offering, also known as an IPO, occurs when a private company offers for sale shares in its entity and becomes a publicly traded business. There are many reasons that New Jersey businesses have IPOs, including but not limited to the need for capital, desires to grow and other strategic planning rationales. However, not all private businesses want to undergo IPOs in order to grow. An alternative to pursuing an IPO is to pursue a reverse merger.

Reverse mergers have been legal in the United States for quite a long time but have not always been very popular. During the reverse merger process a private company merges into an existing public entity. The existing public entity is effectively a shell that encapsulates the private company after the merger. Once the merger is complete the private company is publicly traded, its management retains control of the new business and investments in the company are used to help the merged entity expand.

Business transactions like IPOs, reverse mergers and business sales are all complex legal matters. Individuals who plan to pursue them often do so with the help of legal professionals. Particularly, attorneys who make business and transactional law a part of their practices can be effective partners in a business's plight to expand.

Though not as well recognized as IPOs, reverse mergers are a legal tool that some private businesses may use to achieve their corporate goals. A reverse merger makes a private company public without having to endure the initial public offering process. To learn more about reverse mergers and other options businesses may have with regard to transforming their entities, readers of this Moorestown business law blog may contact business and transactional law attorneys who practice in their areas.

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