Reverse Triangular Merger

Written By
Paul Tracy
Updated June 14, 2021

What is a Reverse Triangular Merger?

A reverse triangular merger is a merger in which the acquisition is carried out by a subsidiary of the acquiring company.

How Does a Reverse Triangular Merger Work?

In a reverse triangular merger, a subsidiary of the acquiring company executes the purchase of the target company. When this occurs, the stock of the target company merges with the purchasing subsidiary of the acquiring company. The acquiring company, subsequently, also wholly owns the target company. The target company's shareholders now receive equity in the acquiring company. This is called a reverse triangular merger because of the three parties involved: the acquiring company, the purchasing subsidiary of the acquiring company, and the target company.

Why Does a Reverse Triangular Merger Matter?

The dynamics of a reverse triangular merger are effective for successful acquisitions where regulatory and/or ownership barriers would, otherwise, prevent a merger from occurring. 

Ask an Expert
All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Reverse Triangular Merger.
Be the first to ask a question

If you have a question about Reverse Triangular Merger, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Reverse Triangular Merger, then please ask Paul.

Ask a question Read more from Paul

Read this next

Paul Tracy - profile
Ask an Expert about Reverse Triangular Merger

By submitting this form you agree with our Privacy Policy

Don't Know a Financial Term?
Search our library of 4,000+ terms