Great Conference!
By David Feldman at 17 June, 2009, 10:07 am
Sorry I’m a bit delayed getting on here to write about the Reverse Merger Conference here in Vegas last week. I stayed a few days extra with the family to enjoy Kid Vegas for a bit.
First, I thought the initial presentation from DealFlow Media on some key stats was very interesting indeed.
First the bad news:
- In the last ten years an average of 250 reverse mergers were completed each year. The peak was the last quarter of 2007 when 82 deals got done. That is now way down.
- The average market capitalization of reverse merged companies has dropped 93% in the last year. The average had gotten as high as $90MM but was about $10MM in the first quarter of 2009.
- We were doing as many as 30 APOs (contemporaneous financing and reverse merger) per quarter in late 2007, that is now down to 5-7 per quarter.
- In the last quarter of 2007 there were 30 Chinese reverse mergers. In the first quarter of 2009 there were less than 5.
Now some good news:
- The average investment into a reverse merger has popped back to $6MM in the second quarter from below $2MM. This is now closer to the average.
- In the second quarter, PIPEs are returning, China is recovering. Over $42MM was raised in APOs vs. $5MM in the first quarter.
- Countries to continue to look at are Canada, UK, Switzerland, Russia and South Korea.
Interesting statistics on shells as well:
- There are currently 819 declared shells. 60% are “development stage companies” as DealFlow calls them (many may be questionable footnote 32/172 type shells), 25% are “legacy” shells with real operations that terminated and 15% are Form 10 or virgin shells.
- As to shareholder base, the average per shell seems to be about 124. Only 52 shells have more than 400 shareholders, an interesting tidbit for sure. The most shells, 585 of them, have between 11-50 holders, and about 275 have less than 11 holders (most of them are probably Form 10s).
- Most popular incorporation states for shells remain Nevada, Delaware, Colorado and Florida.
More stuff on the conference to come…
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