November 13, 2009
David Feldman will be a panelist at the Financial Executive Institute seminar entitled, "Where’s the Money? Finding Public vs. Private Capital Today."
David Feldman's book, Reverse Mergers: Taking a Company
Public Without an IPO, now in its third printing, was published in 2006
by Bloomberg Press (available on http://www.amazon.com).
View David Feldman's reverse merger blog at www.reversemergerblog.com.
David Feldman is a contributor to PIPES: Revised and Updated Edition - A Guide to Private Investments in Public Equity (Bloomberg Press, 2005) available on
http://www.amazon.com.
Dov Scherzer is the U.S. contributor to the British
treatise, Internet Law and Regulation (Sweet & Maxwell, 2d Ed. 1997;
3d Ed. 2002; 4th ed. 2007),
Available Here.
Dov Scherzer is the U.S. contributor to the British
treatise, Electronic Signatures Law and Regulation (Sweet & Maxwell,
1st Ed. 2004),
Available Here.
In the News
David
Feldman quoted in the Reverse Merger
Report about an affiliate stock purchase
case on August 28, 2008.
‘Cash
and Carry’ Gains Popularity
The
Reverse Merger Report (August 28, 2008)
More
shell sponsors are cashing out in reverse
merger transactions instead of retaining
an equity position in the company going
forward, says a securities attorney
that frequently works on the deals.
Money is placed into the shell, which
is then used by the new operating company
to repurchase the shares of the shell’s
owners.
An example of this type of transaction,
according to Feldman Weinstein &
Smith partner David Feldman, is Octavian
International’s merger into Form-10
shell Samdrew IV. Octavian is planning
to raise at least $20 million and the
current Samdrew shareholders are exiting
the shell completely, said Feldman,
who is counsel on the transaction.
The two existing shareholders of Samdrew
are Melvin Lazar, founder of accounting
firm Lazar Levine & Felix, and Kenneth
Rind with financial services firm Caris
& Co. The two are selling the 300,000
shares they currently own to Octavian
for $100,000.
Feldman said that $100,000 is
generally the going price for a fully
audited, clean Form-10 shell. He did
acknowledge that many are sold for $50,000
to $60,000, however, he said those are
“at best a sloppy job.”
These deals, referred to as cash and
carry, can greatly streamline transactions,
as the negotiation process between the
private company and the shell becomes
non-existent, according to a June posting
on Feldman’s blog.
However, merger agreements can be a
virtual non-event, as the owners of
the shell know they are being cashed
out and do not really focus on things
like representations and warranties
of the private company, Feldman said.
This arrangement will not always be
possible, Feldman said, because owning
shares in a successful reverse merger
company can be a lucrative investment.
