5 ms·

Really glad we regulated earlier IPOs out of existence so mom and pop traders can only invest in "safe" companies after 99% of the upside is gone.

chollida1 4y ago
> Really glad we regulated earlier IPOs out of existence so mom and pop traders can only invest in "safe" companies after 99% of the upside is gone. reply Can you explain how we regulated IPO's out of existence?
- BWStearns 4y ago
  _Earlier IPOs_ out of existence. The traditional explanation for why companies are waiting to be decacorns before IPO was that Sarbox basically made it so burdensome to IPO that you just didn't do it early[0]. The argument for this extra regulation is that it made it hard to lose your shirt to something like Enron, the argument against is that an individual (non accredited) investor now can't get into companies early when they still have steep growth ahead. SPACs seem to have brought back the sketchy early companies to the public markets while high quality companies still stay private longer. The current argument for late IPOing seems to be abundant capital for later rounds but we'll see how that plays out given gesturing around the state of things. [0] https://www.vox.com/2014/9/11/6134529/a-new-york-stock-exchange-exec-explains-why-ipos-are-becoming-less https://www.vox.com/2014/9/11/6134529/a-new-york-stock-excha... [1] https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/grow-fast-or-die-slow-why-unicorns-are-staying-private https://www.mckinsey.com/industries/technology-media-and-tel...
  - chollida1 4y ago
    Sorry, appreciate the edit about earlier IPO's, its an important word to your point and was accidentally omitted, my bad. I think we can agree Sarbox has done nothing to slow down IPO's. I have yet to hear a CEO say they'd go public but Sarbox has made it burdensome. I've gone over this before in nauseating detail. Sarbox just made clear what best practices all companies should be doing, public or not. I have yet to hear any burden that it imposes on companies that would prevent them from going public. So I think we can skip Sarbox as a reason. unless someone can show a CEO claiming they'd be public now if not for Sarbox. > The current argument for late IPOing seems to be abundant capital for later rounds but we'll see how that plays out given gesturing around the state of things. If this is true, we should see a bunch of early stage companies going public now as the free money era is over. I'll wait to see by the end of the year or even the end of next year, but it doesn't look like the free money hypothesis is the full reason here.
    - theGnuMe 4y ago
      I've heard CEOs say internally that SarBox is preventing an IPO. But when they say that it just remember it is BS.
gamblor956 4y ago
Sarbanes-Oaxley didn't regulate "earlier" IPOs out of existence. It just made companies provide "mom and pop" traders with proper financials so they could make informed decisions about what they were investing in. The handful of startups that might have generated a possible upside for retail investors would have been able to IPO early even under SARBOX because their financials would have supported an early IPO (as in a proper IPO, not a SPAC), but retail investors would not have shared in this upside anyway because those IPOs would have been heavily oversubscribed by institutional investors. The companies in this article would never have generated upsides for mom and pop investors, because they lacked the financials or business models to support any upside. SARBOX saved mom and pop investors hundreds of billions of dollars that would otherwise have just lined the pockets of investment banks and VCs. This is a good thing.

chollida1 4y ago

> Really glad we regulated earlier IPOs out of existence so mom and pop traders can only invest in "safe" companies after 99% of the upside is gone. reply Can you explain how we regulated IPO's out of existence?

BWStearns 4y ago
_Earlier IPOs_ out of existence. The traditional explanation for why companies are waiting to be decacorns before IPO was that Sarbox basically made it so burdensome to IPO that you just didn't do it early[0]. The argument for this extra regulation is that it made it hard to lose your shirt to something like Enron, the argument against is that an individual (non accredited) investor now can't get into companies early when they still have steep growth ahead. SPACs seem to have brought back the sketchy early companies to the public markets while high quality companies still stay private longer. The current argument for late IPOing seems to be abundant capital for later rounds but we'll see how that plays out given gesturing around the state of things. [0] https://www.vox.com/2014/9/11/6134529/a-new-york-stock-exchange-exec-explains-why-ipos-are-becoming-less https://www.vox.com/2014/9/11/6134529/a-new-york-stock-excha... [1] https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/grow-fast-or-die-slow-why-unicorns-are-staying-private https://www.mckinsey.com/industries/technology-media-and-tel...
- chollida1 4y ago
  Sorry, appreciate the edit about earlier IPO's, its an important word to your point and was accidentally omitted, my bad. I think we can agree Sarbox has done nothing to slow down IPO's. I have yet to hear a CEO say they'd go public but Sarbox has made it burdensome. I've gone over this before in nauseating detail. Sarbox just made clear what best practices all companies should be doing, public or not. I have yet to hear any burden that it imposes on companies that would prevent them from going public. So I think we can skip Sarbox as a reason. unless someone can show a CEO claiming they'd be public now if not for Sarbox. > The current argument for late IPOing seems to be abundant capital for later rounds but we'll see how that plays out given gesturing around the state of things. If this is true, we should see a bunch of early stage companies going public now as the free money era is over. I'll wait to see by the end of the year or even the end of next year, but it doesn't look like the free money hypothesis is the full reason here.
  - theGnuMe 4y ago
    I've heard CEOs say internally that SarBox is preventing an IPO. But when they say that it just remember it is BS.

gamblor956 4y ago

Sarbanes-Oaxley didn't regulate "earlier" IPOs out of existence. It just made companies provide "mom and pop" traders with proper financials so they could make informed decisions about what they were investing in. The handful of startups that might have generated a possible upside for retail investors would have been able to IPO early even under SARBOX because their financials would have supported an early IPO (as in a proper IPO, not a SPAC), but retail investors would not have shared in this upside anyway because those IPOs would have been heavily oversubscribed by institutional investors. The companies in this article would never have generated upsides for mom and pop investors, because they lacked the financials or business models to support any upside. SARBOX saved mom and pop investors hundreds of billions of dollars that would otherwise have just lined the pockets of investment banks and VCs. This is a good thing.