State whether the following statements are true or false with reasons: In a reverse merger a smaller company acquires a larger company.

True. A reverse merger is a transaction where a private company effectively acquires a public company. The private company's shareholders become the controlling shareholders of the publicly-traded company, and the private company's business becomes the public company's business. While the public company is legally the acquirer, the private company is typically larger in terms of operations or value, making it an acquisition of a public shell by a private entity.