3 ms·

Hey, Sarbanes and Oxley, You Killed Our IPO Market--Are You Happy?

4 points by parker 19y ago

carterschonwald 19y ago
My understanding of IPOs is that you do an IPO if you want to raise money to grow your company to the next level, could this just be because larger companies are now simply more aggressive about purchasing small promising companies?
jyu 19y ago
The numbers for IPO'ing and running a public company are now different post-SOx. Even though M&A is now the preferred exit for internet/software companies, are the number of M&A's really growing in number and dollars? http://blog.softtechvc.com/2006/04/vc_exits_mas_co.html http://blog.softtechvc.com/2006/04/vc_exits_mas_co.html "The cost of complying with SOX 404 impacts smaller companies disproportionately, as there is a significant fixed cost involved in completing the assessment...companies with less than $100 million in revenue spent 2.55% [to stay compliant]." http://www.sec.gov/info/smallbus/acspc/acspc-finalreport.pdf http://www.sec.gov/info/smallbus/acspc/acspc-finalreport.pdf "...Sarbanes Oxley costs a private company about $2 million to $5 million in preparation to go public" http://www.lightreading.com/document.asp?doc_id=102632 http://www.lightreading.com/document.asp?doc_id=102632
maximilian 19y ago
This is going to sound a bit stand-offish (or trollish), but I'm sorta glad that its hard to go public with a company. Thinking back to the slew of IPOs of yesteryear that were all of companies that had no product or reasonable revenue source, I'm glad that the current slew of new web 2.0/social networking/etc web companies can't all go public. Letting your stock be bought by the layman is a pretty serious event and shouldn't be done by just any company - They should have staying power. Right now, the people who are educated enough (VCs etc) to be taking the risk in investing in these companies do anyway, and although it slows the growth of these companies some because their influx of capitol is limited, it limits the amount of normal laypeople that get caught up in the hype and make bad investments. That however does bring up an interesting point. Should the gov't protect investors from their own silliness? Where should the gov't step in to protect people from bad investments by means of regulation? The more I think about the stock market and investing as it applies to the average person, the more I don't get it. Stocks seems so arbitrary - Its price is just a result of the collective sorta-independent opinions of all the people owning that stock. You don't get anything from that stock. If I buy some stock of some company, the company doesn't see that money, just some guy who sold it to me. And the stock market is so fickle to bad news or analyst "advice". </rant>

4 points by parker 19y ago

My understanding of IPOs is that you do an IPO if you want to raise money to grow your company to the next level, could this just be because larger companies are now simply more aggressive about purchasing small promising companies?

jyu 19y ago

The numbers for IPO'ing and running a public company are now different post-SOx. Even though M&A is now the preferred exit for internet/software companies, are the number of M&A's really growing in number and dollars? http://blog.softtechvc.com/2006/04/vc_exits_mas_co.html http://blog.softtechvc.com/2006/04/vc_exits_mas_co.html "The cost of complying with SOX 404 impacts smaller companies disproportionately, as there is a significant fixed cost involved in completing the assessment...companies with less than $100 million in revenue spent 2.55% [to stay compliant]." http://www.sec.gov/info/smallbus/acspc/acspc-finalreport.pdf http://www.sec.gov/info/smallbus/acspc/acspc-finalreport.pdf "...Sarbanes Oxley costs a private company about $2 million to $5 million in preparation to go public" http://www.lightreading.com/document.asp?doc_id=102632 http://www.lightreading.com/document.asp?doc_id=102632

maximilian 19y ago

This is going to sound a bit stand-offish (or trollish), but I'm sorta glad that its hard to go public with a company. Thinking back to the slew of IPOs of yesteryear that were all of companies that had no product or reasonable revenue source, I'm glad that the current slew of new web 2.0/social networking/etc web companies can't all go public. Letting your stock be bought by the layman is a pretty serious event and shouldn't be done by just any company - They should have staying power. Right now, the people who are educated enough (VCs etc) to be taking the risk in investing in these companies do anyway, and although it slows the growth of these companies some because their influx of capitol is limited, it limits the amount of normal laypeople that get caught up in the hype and make bad investments. That however does bring up an interesting point. Should the gov't protect investors from their own silliness? Where should the gov't step in to protect people from bad investments by means of regulation? The more I think about the stock market and investing as it applies to the average person, the more I don't get it. Stocks seems so arbitrary - Its price is just a result of the collective sorta-independent opinions of all the people owning that stock. You don't get anything from that stock. If I buy some stock of some company, the company doesn't see that money, just some guy who sold it to me. And the stock market is so fickle to bad news or analyst "advice". </rant>