Page "Mergers and acquisitions" Paragraph 4

" Acquisition " usually refers to a purchase of a smaller firm by a larger one.

Sometimes, however, a smaller firm will acquire management control of a larger and / or longer-established company and retain the name of the latter for the post-acquisition combined entity.

This is known as a reverse takeover.

Another type of acquisition is the reverse merger, a form of transaction that enables a private company to be publicly listed in a relatively short time frame.

A reverse merger occurs when a privately held company ( often one that has strong prospects and is eager to raise financing ) buys a publicly listed shell company, usually one with no business and limited assets.