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A briefing for investors

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July 21, 1998|DEBORA VRANA

It sounds like Wall Street's version of a singles advertisement: "Nasdaq company available to merge with privately held company. Fully reporting and trading on Nasdaq small cap market."

That ad, which appeared in Monday's Wall Street Journal, went on to say that "applicants must be profitable, privately held companies."

The 5-inch-square ad, placed adjacent to the newspaper's stock listings, doesn't reveal the soliciting company's name, but includes a fax number with a 310 area code, meaning at least someone involved is in West Los Angeles.

Local investment bankers called the ad a plea for a "reverse merger," which is when a private company opts to go public by buying a firm that already is publicly traded, but usually just a "shell" operation--as in, a shell of its former self.

That can be a much easier way for the acquirer to go public than by offering new stock itself.

"Frankly, I've never seen an advertisement like it," said one local investment banker at a major Wall Street firm.

Bob Leahy, spokesman for the National Assn. of Securities Dealers, parent of the Nasdaq market, speculated the company could be having trouble meeting certain requirements to remain listed on Nasdaq, such as market capitalization or sales requirements, and as a result is looking to join with a healthy company.

"That's a game that goes on," he said.

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