[mikeyouse]

I think what you're referring to is a reverse merger instead of an IPO -- This is entirely different, just a standard merger transaction. Reverse mergers are when a private company that is trying to go public (often with shaky financials) "merges" with a company that is already public, usually on some OTC board somewhere. This process avoids the scrutiny of the S1 / roadshow / etc and allows a cheap and easy way to 'go public'. Typical mergers involve a lot of due diligence from the acquiring company, they can still go wrong but it's a much different proposition.

https://en.wikipedia.org/wiki/Reverse_takeover

Many of the Chinese 'fraud-cap' companies were taken public in this way: https://www.nytimes.com/2011/07/24/business/global/reverse-m...