Mergers & Acquisitions – what is the difference?

Mergers and Acquisitions (M&A) is the area of corporate financing, management and strategy dealing with purchasing and or joining with other companies. It is an umbrella term for various transactions such as mergers, acquisitions, consolidations, tender offers, purchase of offers and management acquisitions. In mergers and acquisition two companies are involved but in merger two companies are combined in one and in acquisition one usually larger company buys another smaller company.

From a legal point of view, a merger is a legal consolidation of two entities into one entity, whereas acquisition occurs when one entity takes ownership of another entity’s stock, equity interests or assets. From a commercial and economic point of view, both types of transactions generally results in the consolidation of assets and liabilities and liabilities into one entity and the distinction between a merger and an acquisition is less clear. Even though they are used as synonyms they are not the same thing. In a merger new company is created were both companies are theoretically equal so sometimes it is called ‘merger of equals’.

Merger also means new ownership and management and the new stock is issued.  With acquisition new company doesn’t emerge but target company becomes a part of acquiring company. Acquisitions are sometimes known as hostile takeovers and they carry negative connotation so sometimes acquisition may be called a merger even if it technically isn’t. Real difference is in how the acquisition communicated and perceived by the target company, it’s board of directors, managements and employees.

The acquiring company can buy target company with cash, stocks or both combined. The special type of acquisition is reverse merger. It is a deal that enables a private company to become publicly traded in short amount of time. Private company acquires a public shell with little assets and no operation and in that way reverse merges into a public company.

Mina Mar Group provides comprehensive consulting services in the merger and acquisition sector. We specialize in reverse mergers, matching emerging growth companies that are looking to become publicly traded with appropriate shell companies. We provide guidance on all the aspects of reverse merger process, from initial introductions through the actual closing of the deal.

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What is alternative to IPO?

Reverse merger is a good alternative to traditional initial public offering. Reveres merger is the acquisition of a public company by a private company when shareholder of a private company purchase control of the public company and then merge it with a private company. In this way lengthy and complex process of IPO is bypassed. Publicly traded corporation is called shell because that company usually doesn’t have any assets or net value but only its organizational structure.

What reverse merger does is that it separates the going public process and capital raising function. Is is basically conversion mechanism that turns private company into public company. Raising capital is not priority but benefits that come with being a publicly traded company. This separation is the main reason why reverse mergers has so much benefits. private company doesn’t have to hire investment bank for underwriting and marketing the shares the process is less expensive and less time consuming.

IPO usually takes 6 – 12 month, in some cases over the year while reverse merger takes few weeks to four months. Difference is significant and it will enable management to concentrate on the business and not lose too much time and energy dealing with going public process. Even if company is undergoing traditional IPO process it doesn’t mean it will ultimately go public because stock market condition can change in a one year period. Management can decide to opt out if conditions are unfavorable. Reverse merger is less dependent on market condition because company doesn’t rely so much on raising capital but on benefits of being a publicly listed company. The greatest benefits include greater liquidity, greater access to capital market, attract more investors and flexibility in financing.

Reverse merging into a public company opens new financing options including:

  • Issuing stock in an additional secondary offering
  • Exercising warrants, where stockholders may purchase additional shares at predetermined prices
  • Increase liquidity of company stock
  • Higher company valuation since share prices may be higher
  • Using stock to acquire other companies in order to grow the business
  • Using stock incentive plans to attract and retain valuable employees
  • Overall greater access to a variety of capital markets

Mina Mar Group has invested significant resources and capital to develop and maintain an inventory of clean public shells for a variety of stock markets and company sizes. We have done the extensive work of “cleaning” our public shells thereby reducing all associated risks. We provide these public shells to our IPO clients and we also sell our public shells to qualified and interested parties.

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Reverse Merger

A reverse merger is a merger in which a private company becomes a public company by acquiring it. It saves a private company from the complicated process and expensive compliance of becoming a public company. Instead, it acquires a public company as an investment and converts itself into a public company.

Advantages of Reverse Merger

  •      The private company becomes a public company at a lesser cost and gets listed on the exchange without IPO.
  • This type of merger does not create a negative impact on the competition in the market. The chances of reverse mergers being put on hold due to negative impact are very less.
  • It helps in saving of taxes of private companies.

Disadvantages of Reverse Merger

  • Lawsuits for various reasons are very common during the reverse
  • Often the promises made during reverse merger do not come true that leads to almost no increase in value for the shareholders.
  • It leads to reverse stock splits. This further leads to a reduction in the number of shares held by the shareholders.
  • It leads to inefficiency in operations as the private company’s managers do not have the expertise to run a public company.


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Rising Capital with Your Public Company

The Problem Solved by Continuous Offerings

Period to the introduction of Reg A+, companies with existing stock trading are willing to sell with the old Reg A. To achieve this, the price of the price of the stock had to be relatively reasonably compared to the market price. But, the market price by small companies can be unpredictable or volatile. To enable the company changes the offering price, the company must file an amendment of its Reg A+ filing, and it takes weeks to get the approval by the SEC. During this period of waiting, changes in the market price automatically mean that pricing would be out of date.

After the offering is approved by the SEC, companies have the right to offer stock at various prices over a period through the new Reg A+. At the time of sale, pricing information is filed after sale as a supplement which does not require the SEC review.


First, there is a need to understand the difference between “supplementing” and “amending” a Reg A offering. Both supplementing and amending occurs after the Reg A offering is “approved” by the SEC. Reg A offering is certified or approved when the company can cash investor checks upon the release of the offering by the SEC. If the offering is yet to be certified, then it is still under review by SEC.

Amending occurs when there is a major change and filing the amendment requires the SEC to review the offering once again.

Supplementing the offering occurs when no major change is made, and SEC does not have reason to review the offering.

In traditional IPOs, the sales document is referred as the prospectus while in Reg A offering, it is referred as the “offering circular.” Traditional IPOs a registration statement that contains the prospectus is file with the SEC while in Reg A IPOs file offering statements that contain the offering circular with the SEC.

Continuous Offerings

In continuous offering, all the offered stock is not sold at the beginning after the approval of the offering. Some stock is kept for future sale.

The company requires being up-to-date in its semiannual and annual report filling during the sale time to have a continuous offering.

You can do a continuous offering (1) for selling shareholders, (2) for a dividend or an employee benefit plan of the issuer, (3) for securities issued upon the exercise of outstanding options, warrants, or rights, for securities issued upon conversion of other outstanding securities, (4) for securities pledged as collateral, or (5) securities that are part of an offering which commences within two calendar days after the qualification date, will be offered on a continuous basis, may continue to be offered for a period in excess of 30 days from the date of initial qualification, and will be offered in an amount that, at the time the offering statement is qualified, is reasonably expected to be offered and sold within two years from the initial qualification date.

How to do a continuous offering

(1) Through selling shareholders,
(2) Through an employee benefit plan of the issuer or a dividend,
(3) Through securities issued upon the exercise of outstanding options, rights, or warrants, for securities issued upon conversion of other outstanding securities,
(4) Through securities pledged as collateral, or
(5) The securities that are part of an offering which starts within two days after the approval date, may be offered on a continuous basis for a maximum period of 30 days from the date of first approval at the exact amount during the period the offering statement is approved, and is reasonably expected to be offered and sold within 24 months from the first approval date

Continuous offerings will be used by most companies for selling shareholders and stock that will be sold within the next twenty-four months after the offering is approved.

Many companies will utilize continuous offerings for shareholders sales and stock that is intended to be sold within the next two years after the offering is qualified.

Bear in mind that the stock that is tagged “at the Market offering” cannot be sold into the market. The quoted simply means that you are bringing sell order into the market exactly as an ordinary shareholder holding free trading stock would do. Before you can hit the bid, you’ll have to find a buyer.

Supplementing the Offering Circular

Final pricing information in continuously offered stock can be applied by supplementing the offering circular, wherein the offering statement is approved on the idea of a genuine price range estimate. So, within the offering statement, you need to specify the range of price. When the SEC approves the offering, you’ll submit only a supplement stating the final pricing when you sell the stock.

However, you cannot leave out the number of securities (the volume of equity securities or aggregate primary number of debt securities) to be offered.

You can add-on the offering circular to change the price range of, or show a drop in the volume of, the securities offered in reliance on an approved offering statement within Regulation A, inasmuch as the decline in the volume of securities offered or change in the value range would not significantly change the declaration contained in the offering statement at official requirement.

Any decline in the securities volume offered and a fluctuation in price range, for instance, price drop from low or high may bounce back or be noticed by the commission in the offering circular supplement that has been filed if, on the average, the volume drop or price change represent not more than a 20% difference from the change from the highest average offering price measured using the information in the approved offering statement.

By no means, however, can your new terms surpass the limitation of the offering amount. Along these lines, if you submit an offering for the highest Reg A measure of $50 million, you can’t exceed that limit.

If the company leaves-out certain information related to price or pricing from an offering statement at the period of qualification, the company would need to submit an offering statement supplement pricing information not more than two business days after the earlier of such pricing information evaluation or the first date that the offering circular is used after qualification.


After an offering is approved, the company can submit an offering that allows selling of it stock. And shareholders can sell their stock that way also.

When the information of the final pricing is known, it is filed or submitted to the SEC within two days as supplement. Amendment is not required.

Call us to discuss how we can help your Company!

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Regulation A VS IPO

Even tough Reg A is an exemption from registration requirements like Reg D and Reg CF, Regulation A has more in common with IPO and it is often called a “mini IPO”. They are both open to all investors and securities offered can be traded and resold. advantages of Reg A is that it is more cost effective and more marketing friendly. Registration statement, known as 1A is similar to but simpler than S1 registration statement that is traditionally used for IPO.

It requires just two years of audited financials and general level of disclosure is more streamlined. Preparation of 1A registration statement, attorneys and accountants costs and SEC review time are reduced. Also marketing of Reg A permits use of variety of media. SEC allows general solicitation and the goal is to find potential investors regardless if they have brokerage accounts with syndicate firms or not. To sum it up Reg A is saving time and money.

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Why Public Relations is Important for your Business

If you are hoping to get the word out there about your business, public relations is the answer.

Public relations has the power to reach a large audience, giving your business the platform it needs to really shine and allows you to attach credibility to your product or company.

With PR, it’s much easier to aim and fire on that target market you are hoping to reach. Media sources can place the information that is right up the consumers alley and give them the required information they need.
If you are an accountant hoping to generate some new clientele, placing an ad in a teen magazine likely won’t help you. But a well written article smack dab in the middle of the finance section will probably lead you right where you want to be.

PR takes your entire business and puts it in the lights.

Effective PR leaves your company with a positive image, which is always helpful in the future.

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Gain Visibility for Your Company

Most small businesses and new publicly traded companies fail because of a lack of investor visibility. Increase your company’s visibility today with Mina Mar Group. We will bring your company up to speed with the current communication and marketing trends that you might have been missing out on. Our dedicated team of professionals will open new lines of communication between you and your current and potential shareholders, brokers and/or investors.

MMG also provides public relations services so you can stay focused on your business while we focus on the needs of your investors. We use every opportunity to provide fact-based information about your products and services. We deliver information that is editorially neutral and free of promotional hype — an honest presentation which is never an endorsement.

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