Is the Emerging Growth Company provision of the JOBS Act really encouraging IPOs?
Here’s an update on the data we compiled in June on Emerging Growth Companies, the new designation under the JOBS Act potentially affecting most companies going public.
Using the Knowledge Mosaic SEC Filings page, we can now count nearly 500 companies that have declared themselves to be Emerging Growth Companies – rendering them eligible for up to five years of much less stringent SEC disclosure requirements.
Let’s recall that the raison d’etre of the EGC provision is to nudge companies into going public that might otherwise not. Is it working? Here are some numbers; you can draw your own conclusions.
About two thirds of the self-declaring EGCs had already set in motion the process of going public when the JOBS Act was signed into law on April 5, 2012. In other words, only about one out of three current EGCs commenced the IPO process after the Act was signed into law.
Here’s another angle. Since April 5, there have been a total of 235 companies that have begun the going-public process on the US market via the IPO. (Data includes registrations by foreign private issuers, closed-end investment companies, and REITs as well as conventional US companies.) Of those, 148 — again, about two thirds — have eventually claimed EGC status (and presumably many more will going forward). But perhaps significantly, only about 40% (91 of the 235) claimed to be EGCs in their initial IPO paperwork.
For more information on how we generated this data, please contact us at email@example.com