Reverse Mergers and the Role of Bulletin Board Shells
Author: Destiny Aigbe
October 8, 2024
Reverse mergers have become a popular method for private companies, especially those from sectors like biofuels, health supplements, and agricultural science, to go public. This method allows private companies to merge with Bulletin Board Shells—companies without current business operations but that are still subject to the reporting requirements of the Securities Exchange Act of 1934 (Exchange Act).
Why Bulletin Board Shells Are the Vehicle of Choice: Bulletin Board Shells, trading on the NASDAQ Over the Counter Bulletin Board (OTCBB), have detailed reporting requirements, making due diligence more practical. These companies must file periodic, quarterly, and annual reports with the SEC. Their compliance with SEC Rule 15c2-11 enables market makers to "piggyback" and quote securities after the proper information is filed with FINRA, creating a more transparent environment for mergers.
The private company benefits from reverse mergers by gaining access to public markets faster than through a traditional IPO. Moreover, the due diligence process ensures that liabilities, pending lawsuits, and disputes are revealed, safeguarding the merging company.
How SEC Requirements Deter Fraud: Bulletin Board Shells are less susceptible to market manipulation, concealment of key shareholders, and fraudulent activities. The SEC’s comprehensive reporting and auditing process make these shells a safer vehicle for companies looking to go public. With the assistance of an experienced securities attorney, private companies can conduct thorough investigations into the shell companies they intend to merge with, making reverse mergers a viable and secure path to public trading.
About the Author
Destiny Aigbe
Managing Partner
Aigbe Law PLLC | Dark Alpha Capital
A Corporate and Securities Law Firm
With a robust foundation in law and finance, Destiny Aigbe has carved a distinguished career, underpinned by his pivotal role in orchestrating and managing complex transactions that have propelled companies to significant growth and market prominence. As a seasoned attorney and strategic advisor, Destiny has been instrumental in facilitating over $75 million in capital raises, demonstrating a keen acumen for securing funding and fostering investor confidence.
Destiny's leadership in the execution of six successful public listings, through meticulously structured reverse mergers and registration statements, showcases his adeptness in navigating the intricacies of the public markets and his capacity to guide companies through transformative growth phases. His involvement in five mergers as an operator further illustrates his versatile skill set, extending beyond legal expertise to include hands-on management and operational strategy, though these ventures did not involve funding.
Destiny's professional journey is marked by a commitment to excellence and a diverse range of experiences, from representing a wide spectrum of clients including public and private companies, and investment firms, to holding significant roles within the US government. His tenure with the US Department of State and the National Institutes of Health highlights his adaptability and his contribution to the advancement of entrepreneurial ventures in sectors like biotechnology and nanotechnology through strategic funding initiatives.
An alumnus of Vanderbilt University Law School, Destiny focused on Finance and Mergers & Acquisitions, further honing his expertise with a certificate in Law and Business. His foundational education in Finance was obtained with honors from the University of Maryland's Robert H. Smith School of Business, which laid the groundwork for his subsequent achievements in investment banking and legal practice.
Residing in the Washington, D.C. area, Destiny Aigbe continues to leverage his extensive experience and insightful leadership to drive innovation, growth, and success for his clients and the ventures he is involved with.
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