Just 37 reverse mergers were completed in the second
quarter of 2011, according to the Reverse Merger Report. That's down
over 50% from the second quarter of last year. Still way more than IPOs, but
down is down. Much of this, of course has to do with China. Only three Chinese
APOs were completed in the whole first six months of the year, raising about $4
million each. A total of 31 Chinese companies did complete reverse mergers in
the first half, but only those three raised money contemporaneous with the
going public event.
But it's not just about China. Even non-China deals are
down 65% from last year, says the RMR. When you combine the China
problem with the SEC issuing very negative pronouncements about the reverse
merger technique, you can add 1+1 and get fewer deals, even as Wall Street and
the capital markets have strengthened overall.
All I can tell you is, we're busier than heck. I am
personally doing seven reverse mergers right now, six here in the US and
one non-US deal (but not China). So I remain optimistic that companies
will still find efficient ways to go public. Hopefully the Regulation A reform
working through Congress will help make a real difference if the SEC takes
actions which have the effect of discouraging more reverse mergers. But this
all may take awhile to shake out.
For additional insights on reverse mergers,
SPACs, other alternatives to traditional initial public offerings, the small
and microcap markets and the economy, visit the Reverse Merger and
SPAC Blog by David N. Feldman, Esq., Partner of Richardson &
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