Reverse mergers, often called reverse takeovers, are conducted when private companies, including corporations with headquarters in foreign countries, gain access to U.S. capital markets by merging with a public company based in the U.S. In a reverse merger the private company is acquired by an American public shell corporation.
In most cases, even when a private company merges with a public U.S. company, the members of the private company gain a controlling interest in the public company. The private company's shareholders may also gain a controlling interest reflected in the board of directors of the public shell company. The private company's assets then become the primary assets of the post-merger company.