The following questions must be answered after reading through the case study attached in the PDF file.
1. What are common reasons for a private firm to go public?
2. What are corporate shells, and how can they create value? Be specific.
3. Who are the participants in the case study, and what are their roles in the reverse merger?
4. Discuss the pros and cons of a reverse merger versus an IPO.
5. What are the auditing challenges associated with reverse mergers? How can investors protect themselves from the liabilities that may be contained in corporate shells?
6. Mill was recapitalized just prior to completing its merger with Allied. What was the purpose of the recapitalization? Did it affect the ability of the combined firms to generate future earnings? Explain your answers.