A private firm can purchase controlling shares in a public shell (a publicly listed company that has negligible assets and liabilities) and merge its assets into the shell, thus becoming a public company.

How It Works: There are companies who are controlling shareholders have sold off the assets of the company for cash and are looking for another business to invest in. The best way to find people who control public shells is to contact partners in Big Six accounting firms, who work with these types of companies. Management can also contact the securities departments of large law firms to see if they are working with anyone who owns a public shell.

Some public shells have restrictions on what the money can be invested in. For example, in the 1970s there were a lot of public shells dedicated to investing in oil-related companies. They were restricted by their shareholders from investing in anything but oil related businesses.

Preparation Expectations: Individuals who own a public shell look for the same information as venture capitalists.

Advantages: Public shells usually have sizable amounts of money at their disposal, ranging from $500,000 to millions of dollars.

Disadvantages: Management is no longer running a private company, and is now under the scrutiny of the investors who have brought management into the shell, as well as individual investors who will buy future shares in the new public company. There are many legal and accounting reporting costs to bear.

How To Keep Them Happy: Stay focused on building sales and keeping costs to a minimum. Only spend money on things that will enhance the value of the company. This could mean putting off buying a building or upgrading office.

Internet Address: Currently there is no site focused on public shells.