Facebook And The Big IPO Letdown

Facebook And The Big IPO Letdown - 2/8/2012

Home

Index of Filings

News and Press Releases

Filings

Decisions

Settlements

Litigation Activity Indices

Top Ten List

Annual/Quarterly Updates

Clearinghouse Research

Articles & Papers

Search

Related Sites

About Us

Local Rules

Sponsors

Register

_______________
Copyright © 2001
Stanford Law School

2012 News and Press Releases

SEARCH

News	News 2012
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

Facebook And The Big IPO Letdown
Vivek Wadhwa

The Washington Post. February 8, 2012
_________________________________________________________________________

EXCERPT Facebook’s IPO has raised hopes in Silicon Valley that the tech industry’s days of wine and roses will soon be back with hundreds of start-ups going public. Even President Obama seems excited. He recently proposed an “IPO on-ramp” to help young, smaller companies go public. Sadly, everyone is going to be disappointed. We are not going to see the flood of IPOs that happened during the late 90’s. The rules of the game have changed. The infrastructure to facilitate IPOs is no longer there, and the regulatory environment has changed. Joe Grundfest, a professor and a colleague at Stanford Law School, outlines four reasons why the path to the IPO has become so steep for aspiring companies. First, regulatory costs for companies that aspire to go public have increased substantially. Lawyer and auditor fees have mushroomed in the wake of the Sarbanes-Oxley Act, and these professionals cannot be paid in stock. They require cold, hard cash that could otherwise be spent on engineers, sales staff, hardware acquisition, marketing, and other revenue generating functions. Then, once a company goes public, it has to scale up its board membership to comply with more extensive governance requirements as outlined by the NYSE and NASDAQ. And larger boards are more expensive in terms of both the cash and equity commitments required on the part of the company. […]

Back to News page | Back to Archived News 2012 page | Back to Top

�