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Reverse Merger

umaa's legal clinic (simple solutions for complex legal issues) (165 Points)

05 January 2009

Can anybody explain what is reversemerger?

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CS Arpita Rajpurohit (Company Secretary) (1111 Points)
Replied 05 January 2009

Reverse Merger’ is a coined term generally used in those cases of mergers where a company having higher networth is merging into a company having networth lower than it.

here a profit making co. merges into a loss making co.

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CA Sudhir Halakhandi (PRACTICING CHARTERED ACCOUNTANT) (13396 Points)
Replied 05 January 2009

The acquisition of a public company by a private company, allowing the private company to bypass the usually lengthy and complexprocess of going public.

(Guest)

This happens when loss making company acquires profit making company.This is generally practices due to taking advantage of loss of the company for tax purpose.if profit making company acquires loss making company then loss of merging company will not be considered for tax pupose.