The Research Of Reverse Merger From The Perspective Of Cost Benefit Analysis

A reverse merger is a popular indirect way to be listed in recent years in A share market. It is also a relatively new way of merger and acquisition. The company seeking to be listed faces not only very long time waiting for the listing but also IPO high threshold. Reverse merger has become popular phenomenon in A shares market recently because of the reasons above. Because of the higher and higher price of the shell company and the more complex cost and benefit involved in the reverse merger process than ever, the costs and benefits become the most concerned part in the reverse merger from buyer’s view. How to calculate the costs and benefits effectively become a problem needed to be solved in the process of reverse merger for both buy side and sell side.On the basis of the theory of reverse merger and cost benefit, this paper creates a CP model. Through the model, quantitative analysis on the cost and benefit of reverse merger can be done effectively, and relevant reference for reverse merger can be made.Through the CP model created in this paper, the enterprise can quickly analyze the costs and benefits of the reverse merger and decide if and how to choose reverse merger to be listed from both quantitative and qualitative point of view. In a word, the enterprise should choose lower cost model to be listed under the condition of certain benefit or choose higher benefit model to be listed under the condition of certain cost.