Reverse merger

A reverse merger is when a private company buys a public company (one whose shares trade on a stock exchange) and takes it over, effectively becoming public itself without going through the traditional IPO process. You'll see this term in SEC filings when companies are restructuring ownership. It matters because it's a faster, cheaper way for private companies to go public—but it can also be riskier for investors since these companies skip some of the scrutiny that comes with a normal IPO. For example, if TechStartup Inc. (private) purchased PublicShell Corp. (a struggling public company with few operations), TechStartup would emerge as the new public entity.