Explain meaning of Reverse Merger. List down the benefits available in it.

Reverse Merger: 'Reverse merger' is a commercial term that is not found in any statute. Traditionally the phrase reverse merger has been used to describe a merger of a healthy unit into a sick unit. It means that the profit making company merges into the sick company thereby becoming eligible to carry forward of losses etc. without the aid of Section 72A of the Income-tax Act, 1961. The profit making or healthy company extincts and looses its name and the surviving sick company retains its name. It is actually a device to bypass merger under Section 72A of the Income-tax Act, 1961. Benefits of Reverse Merger: In Reverse Merger Losses are carried forward, which would otherwise have not been available. Goodwill, which consists, in the name of profit making amalgamating company, is also retained.