A technique used by private companies to go public without registering an initial public offering (IPO). A reverse merger occurs when a private company acquires or merges with a public company that is little more than a shell. That is, although the public company is listed on a stock exchange, such as the NASDAQ, or trades in the over-the-counter (OTC) market, its primary business has failed and it has sold off most of its assets and discontinued operations. Reverse mergers became popular after the stock market bubble burst in 2000 and the initial public offering market virtually shut down. Also called a back-door listing.