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Are small IPOs good for companies? That's a question that's honestly on my mind. My gut reaction is like "anyone who wants to go public w/o this kind of scruti

by randall 15y ago

Are small IPOs good for companies? That's a question that's honestly on my mind. My gut reaction is like "anyone who wants to go public w/o this kind of scrutiny shouldn't," but that's completely from a non-informed place. Anyone have any strong opinions about the value of small cap companies on the NYSE / NASDAQ?

MichaelApproved 15y ago
It's important for smaller companies to have access to the market so they can raise capital and compensate employees with stock options. Could make it a stronger company without needing to change the business model or grow the company.
- rhizome 15y ago
  1. They don't have a right to a market 2. There's already a market available to them: the internet 3. Smaller companies already can and do satisfy the regs. 4. Why shouldn't they have/want to change an nonviable business model? 5. What about risk?
  - MichaelApproved 15y ago
    Let me clarify: I'm not in favor of lowering the regulatory requirements for companies, big or small. It's important to help them access the market but not at the expense of less regulation.
  - russell 15y ago
    I dont think you understand the issues. The article and the other posters are talking about the ability of a small company to issue publicly traded shares via an IPO. 2. The internet is not a capital market. If you try to issues shares in the US or to make a market in them you will quickly be visited by the SEC. 3. No. I worked for a $35m revenue company a few years ago which wanted to go public. The cost of preparing for the offering would have been in excess of $3 million. That pretty much eliminates IPOs for small companies. 4. ??? Once a company goes public, it is subject to the costs of Sarbanes-Oxley which entails costs of $3 million and up per year. Sure, simplification of the IPO process for smaller companies entails more risk, but the trade off is a more vigorous startup arena. I once did some back of the envelope calculations that convinced me that the yearly cost of SQ exceeds all the losses from Enron.
    - MichaelApproved 15y ago
      "I once did some back of the envelope calculations that convinced me that the yearly cost of SQ exceeds all the losses from Enron" But without the trust that the regulation adds, there would be the potential for more Enrons and less people willing to invest in the market.
    - rhizome 15y ago
      4. ??? I was referring to the GP's, "Could make it a stronger company without needing to change the business model or grow the company."

by randall 15y ago

MichaelApproved 15y ago

It's important for smaller companies to have access to the market so they can raise capital and compensate employees with stock options. Could make it a stronger company without needing to change the business model or grow the company.

rhizome 15y ago
1. They don't have a right to a market 2. There's already a market available to them: the internet 3. Smaller companies already can and do satisfy the regs. 4. Why shouldn't they have/want to change an nonviable business model? 5. What about risk?
- MichaelApproved 15y ago
  Let me clarify: I'm not in favor of lowering the regulatory requirements for companies, big or small. It's important to help them access the market but not at the expense of less regulation.
- russell 15y ago
  I dont think you understand the issues. The article and the other posters are talking about the ability of a small company to issue publicly traded shares via an IPO. 2. The internet is not a capital market. If you try to issues shares in the US or to make a market in them you will quickly be visited by the SEC. 3. No. I worked for a $35m revenue company a few years ago which wanted to go public. The cost of preparing for the offering would have been in excess of $3 million. That pretty much eliminates IPOs for small companies. 4. ??? Once a company goes public, it is subject to the costs of Sarbanes-Oxley which entails costs of $3 million and up per year. Sure, simplification of the IPO process for smaller companies entails more risk, but the trade off is a more vigorous startup arena. I once did some back of the envelope calculations that convinced me that the yearly cost of SQ exceeds all the losses from Enron.
  - MichaelApproved 15y ago
    "I once did some back of the envelope calculations that convinced me that the yearly cost of SQ exceeds all the losses from Enron" But without the trust that the regulation adds, there would be the potential for more Enrons and less people willing to invest in the market.
  - rhizome 15y ago
    4. ??? I was referring to the GP's, "Could make it a stronger company without needing to change the business model or grow the company."