Reverse merger

A reverse merger is when a private company buys a public company (one whose shares trade on a stock exchange) and takes over its stock listing, effectively going public without the usual IPO process. You'll see this term in SEC filings when companies want to raise capital or gain public status quickly. It matters because reverse mergers can be faster and cheaper than traditional IPOs, but they sometimes attract less-vetted companies, so investors should dig deeper into the details. For example, if TechStartup Inc. (private) acquired ShellCorp (a dormant public company), TechStartup's owners would suddenly own a publicly traded company—no lengthy IPO required.