Cash Shell

A cash shell is a simple way of taking a company public and achieving a cash injection. Some of these non trading vehicles are created intentionally by directors who are looking to reverse trading companies into the shell. These are defined as clean shells and are not likely to have any baggage.

Dirty shells have traded before and for some reason they have ceased trading in their previous form, but still have cash or assets linked to the company. Obviously these come with a health warning. There is a chance that the dirty shell will have someone with a grudge/law suit which will appear after the new owners take over. Very through due diligence is essential with any shell.

The management of a cash shell will be looking for a partner company that will give them a good return for their cash shell. Your company will have to have a strong board, good product and profit forecast.

So cash shells offer a quicker way to a small cap market, but come with some risks. They are more relevant now because they offer hard to find cash and company paper with a perceived value. Allowing the purchase of distressed companies for cash and company shares. Depending on the quality/price paid for the deal, it could help increase the share price of the new conglomerate.

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