Refinance Your Home Equity Loan Refinancing your home equity loan is an excellent way to save money. By refinancing your home equity loan you can lower your interest rate and finance for a longer or shorter term. Some things to consider before refinancing your home equity loan are the ... Selecting An Equity Finance Consultant Selecting An Equity Finance ConsultantByWilliam CateMost Chief Financial Officers (CFOs) realize that it's a hundred times easier to raise venture capital for a public company than a private company. There is no shortage of individuals and firms seeking ... Using the Internet to Find Personal Finance Many people worry about the best way to keep track of their personal finances, yet at the same time overlook one of the best tools at their disposal for keeping their finances in check. By utilizing the power of the internet it's possible to keep track of ...
Alternative Venture Finance: Shell Corporations
Shell company financing works in two ways. In many cases, the shell corporation is created from scratch. The purpose of these shells is to raise money and to get a number of shares outstanding into the public's hands. In most cases, the shares are sold in units. That is, the shares are sold as one share of common stuck plus warrants at the current offering price.
The “empty” shell is then merged with the operating company. The merged companies begin to report operating results and when the results are good, existing stockholders exercise their warrants and provide needed capital into the company.
A second type of shell corporation is formed when the company seeking capital identifies an existing shell or inactive public company (IPC) as a candidate for a reverse acquisition. This typically occurs after a public company emerges from bankruptcy. At this time it may be void of assets other than cash. In fact, the principal asset of the IPC is its often its public registration and a roster of shareholders from which new capital may be raised.
Shell corporations are a quick and cost effective way of taking a company public and raising public capital. However, typically bridge capital is required to finance the process and take the company to a point where investors are interested in exercising their options.
About the author: GT Business Plans has developed over 200 business plans for clients that have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. GT Business Plans is the sister site of GT Venture Capital
