There is an eye-opening comment buried deep in an article nominally on venture capital in today’s Boston Globe. The piece is an otherwise somewhat self-congratulatory one about how well Boston-area security startups did in 2004, mostly via mergers. This snippet, however, is on one startup’s IPO plans:
… the criteria for a successful IPO are extremely hard to meet right now.
”Unless you can do a billion-dollar market cap, you can’t really go public,” says [a Broadview investment banker], whose firm advised Netegrity in its acquisition by Computer Associates. Deninger adds that the costs of complying with Sarbanes-Oxley regulations — not to mention the associated liabilities for company officers — are dissuading many companies from going public.
A billion-dollar day-one market cap is now required to go public? There is an unintended consequence of securities regulation for you.