IPOs and SarbOx’s Unintended Consequences

From a story in today’s SF Chronicle:

A growing number of entrepreneurs, faced with spiraling accounting costs and stiffer corporate governance rules, are choosing to keep their startups private or sell them to a rival rather than take them public.

For young companies, the choice between going public and selling to a rival was once an easy one. That’s because an IPO generates a much higher return — as much as a third higher, according to some studies — for the company’s executives and early investors.

But in the wake of corporate reforms prompted by a series of accounting scandals, the decision is no longer clear-cut … [The] costs of being a public company have more than doubled in the last three years, according to securities attorneys, venture capitalists and startup CEOs.

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