Article
Reverse merger vs IPO: which costs more?
An IPO usually costs more. A reverse merger typically runs $400,000 to $600,000 all-in plus the equity the shell's shareholders keep. An IPO costs $600,000 or more in third-party costs, plus underwriting fees of 6% to 8% of the raise, plus expenses and warrants. The cheapest route is usually neither: a direct listing typically costs $300,000 to $500,000.
Joel Arberman, Meraki Partners · Reviewed October 2026. Based on 17 companies taken public since 1999: 11 by direct listing, 4 by reverse merger and 2 by IPO.
How do the costs compare?
| Reverse merger | IPO | Direct listing | |
|---|---|---|---|
| Third-party costs | $400,000 to $600,000, including a shell of about $300,000 | $600,000 or more | $300,000 to $500,000 |
| Other costs | Equity kept by the shell's shareholders | 6% to 8% of the raise, plus expenses and warrants | None |
| Typical time | About 6 months | About 7 to 8 months | About 10 months |
| Minimum raise | None | Generally $15 million or more | Typically $500,000 to $2 million |
When is an IPO worth the cost?
When the company can support a raise of $15 million or more and wants to list on Nasdaq or the NYSE immediately. Few small companies can.
When is a reverse merger worth the cost?
When speed truly matters, such as when investors are ready and might be lost to a few extra months.
Why do most of our clients use a direct listing?
It costs less, needs no bank and no shell, and the costs can be paid from the pre-listing raise. 11 of the 17 companies we have taken public used one.
Related questions
Want to talk it through?
Tell us where you are, and we’ll set up a first conversation about whether going public belongs in your plan and what it would take. If it isn’t right for you, we’ll say so.