Reverse Takeover

In what is also called a reverse merger, a private company purchases an increasingly controlling stake in a publicly-traded company. The private company becomes intentionally absorbed into the publicly-traded one, exercising its influence from within while acquiring the other company's public listing. It is called a reverse takeover, because larger publicly-traded companies more frequently acquire smaller private companies.

To illustrate, suppose a private company, XYZ, wishes to acquire publicly-traded company ABC in order to become publicly-listed in a cost-effective way. XYZ purchases an increasing number of shares in ABC, eventually making active decisions concerning its management and output. As the de facto owner of ABC, XYZ may superimpose its own name on ABC while retaining its original public listing.