The NASPP Blog

For the past few years, the IPO market has behaved like a pendulum, swinging from left to right, from existent, to non-existent, to hot again. I’ve heard the buzz over and over: “this year the IPO market will be hot again”. Certainly with companies like Zynga and Yelp recently taking the IPO plunge, and with savory IPO prospect Facebook in full rumor mode, there are definite signs of life. That’s why a bill making its way through Congress has garnered the interest of those who are keeping an eye on the IPO market.

The “JOBS” Act

Last week the House made a rare bipartisan move in approving the “Jumpstart Our Business Startups”, or JOBS, Act. What is this bill? Well, it’s legislation aimed at making it easier for small businesses to gain access to capital and for startups to go public and continue to grow. One aspect of the bill that caught my eye is a provision that would create a special category of startup companies, called “Emerging Growth Companies”. Classification in this category would mean that a company would gain a temporary reprieve from SEC provisions for up to 5 years, or, until it exceeds $1 billion in annual gross revenue or becomes a large filer. Companies would gradually phase in compliance with SEC requirements, minimizing the cost impact of compliance at the time of the IPO.

What to do When You’re Not Focused on SEC Compliance

Obtaining reprieve from SEC provisions would mean startups could continue to focus on what they are doing best, without the burden of assuming the cost, resources and time associated with complying with all of the SEC requirements imposed on public companies today. More funds could be directed towards their growth momentum, and related activities like hiring talent. This could be a giant incentive for a small company that wants to raise more capital through an IPO, but can’t necessarily afford the typical cost burden of going public.

So is it a Shoo-In?

So far the measure has only been approved by the House of Representatives. The next step is a Senate vote. And while the Senate prepares to receive the bill, companies aren’t sitting idle, waiting for action; just this week executives from more than 700 companies, including Apple and Yelp, sent a letter to Senate leaders encouraging them to pass the legislation.

It almost sounds too good to be true; and yet, it seems like there is a good possibility this legislation may fly. If it does happen, I’m betting the incentives will be enough to entice more than a few companies to accelerate their IPO timelines. For those working in companies on the IPO track, now may be a good time to start preparing for the possibility that you will find that email in your inbox: “We’re going public…and FAST!”

-Jennifer