Deals are Back!
By David Feldman at 22 March, 2010, 5:35 am
This month’s Reverse Merger Report lets us know that deal volume in February hit an all-time monthly high of 31. The article also talks about the increase in the use of Form 10 shells in reverse merger deals, mentioning the reverse merger of Kobe Sport with a Form 10 shell that month (disclaimer: my law firm worked on that transaction). China continues to lead the way with 11 of the 31 deals. To give you a sense of how much better things are, there were a total of 11 Chinese deals in the whole first quarter of 2009.
The article also suggests that there is a very strong supply of shells, with shell shareholders generally retaining less of the equity post-merger. This also is attributed partly to the proliferation of Form 10 shells. Meanwhile, although the number of deals is up sharply, there is still a relative paucity of financings in these deals. Well less than half of the transactions in February included a contemporaneous financing. Bottom line of the article: we’re happy at such a great month but still cautiously optimistic about the months ahead. My view: more is better!
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