The JOBS Act and Confidential IPOs
April 03, 2014
By Marc Fogarty CPA, CFE
Twitter, GoPro, Box and a few others are making news headlines with their confidential IPO's. Could the recent surge in confidential IPO's be a sign that the Jumpstart Our Business Startups Act, also known as the JOBS Act, is encouraging small to midsize companies to test the public market?
For many start-up and small companies seeking to raise capital, the confidential IPO is an appealing option. By filing under what people reference as a "confidential" or "stealth" IPO, a company can keep much of its sensitive financial information, which a competitor might want to see, out of the public eye until shortly before shares begin to trade.
Since I work with many small and start-up life sciences and technology companies who are using the confidential IPO filing process, I have had people ask me, “If the JOBS Act wasn’t here, would these companies still be filing for an IPO?” Unfortunately, this is like the age old question – which came first the chicken or the egg? You’ll never know which came first. What I do know is there are many other factors in determining whether a company is ready for an IPO.
If your company is considering entering the public market, I encourage you to read our recently published blog series, “Is Your Private Company Considering Going Public? Steps to Consider When Bringing Your Private Company to IPO.” This blog series addresses many common questions including how to determine whether the timing is right for a company to seek an IPO as well as the pros and cons of becoming a public company.