A new enforcement action by the U.S. Securities and Exchange Commission (SEC) against a financial advisor who specializes in assisting China-based businesses that become U.S. public companies through reverse takeovers (RTO’s) highlights how such advisors present a distinct – yet often poorly understood – risk for private equity investors. As more and more PE investors look at transactions involving RTO companies, it is crucial that due diligence focus not only on the quality of the underlying business and its management but also on the RTO advisor itself.
This client alert briefly summarizes the background of RTO companies and their advisors, the recent SEC enforcement action and implications for PE investors that are considering transactions involving RTO companies.
Please see full alert below for more information.
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