Statutory Merger

The Statutory Merger is a simple transaction as the private company is merged into the public corporation in it's entirety. The private corporation becomes extinct and the public company is the surviving entity.

Public Company acquires Private Company. The Private Company shareholders receive a majority position of stock in the Public Company. All Assets and all Liabilities are acquired by the Public Company. The Private Corporation becomes legally extinct and the shareholders of the Private Company now own controlling interest in the Public Company.

Stock for Stock Reorganization

The stock for stock reorganization is a little different than a statutory merger. In this case, the shareholders of the Private Company exchange their shares for shares in the Public Company. Rather than becoming legally extinct, the Private Company becomes a wholly owned subsidiary of the Public Company.

Private Company shareholders exchange their stock for a majority position of shares in the Public Company.

Both companies survive, however the private company is now wholly owned by the public company. 20% and 80% are used as examples as ownership splits. Percentages vary from deal to deal.

Stock for Assets Reorganization

The stock for assets reorganization is more complex than either a statutory merger or stock for stock reorganization. In this case, the Public Company acquires substantially all the assets of the Private Company. The Public Company issues a controlling position of stock to the Private Company for those assets. The Private Company then distributes the stock of the Public Company it just received to its shareholders. The Private Company liquidates. The end results are the Public Company owns most of the assets of the Private Company and the shareholders of the Private Company now own a controlling interest in the Public Company.

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