RTO......Definition
A reverse takeover is one way of going public. A public company can take over another company by issuing a large number of shares to the shareholders of the target company. This may result in the new shareholders owning more shares than the original controlling shareholders - hence a change of control. Hence, this is referred to as a reverse takeover. Although the smaller company has technically taken over the larger one, the larger one's owners are now in charge.
Example: I have a public company with 1M shares which are trading at $1. You have a private company which you are prepared to sell to me for $3M. I buy your company but the currency I use to pay for your company is shares in my company, i.e. 3M shares (=$3M). So now you own 3M shares in "my" company, i.e. 3/4 of the total. So, it really isn't "my" company anymore. It's yours now because YOU control it. Although my company took yours over, you're really the one in control - hence "reverse" take over.
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