Press Releases
Jerry Walsh |
Chicago, IL – According to a new study by BDO USA, LLP, one of the nation’s leading accounting and consulting organizations, capital markets executives at leading investment banks have conflicting views of the recently enacted JOBS Act. A narrow majority (55%) of I-bankers believe the JOBS Act will be successful in increasing the number of businesses going public on U.S. exchanges. However, that growth will come with one major drawback as an identical majority (55%) of capital markets executives believe the new law’s rollback of regulatory requirements for these newly public companies increases the chances of scandals at these businesses.
Solid majorities of the capital markets community suggest that there will be a "positive impact" on the U.S. IPO market when considering the JOBS Act's provisions that repeal the ban on I-banks from publishing analyst research on IPOs they are marketing (80%), provide a five-year exemption from Sarbanes-Oxley mandated audits of internal controls (74%) and increase shareholder thresholds for private businesses (66%). By more narrow majorities, there is also support for the likelihood of a positive impact from the new law’s provisions to allow crowdfunding (58%) and confidential SEC filings (52%).
Proportions of capital markets community that believe various elements of the new JOBS Act will have positive, negative or no impact on the U.S. IPO Market:
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Positive
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Negative
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No Impact
|
|
|
Allowing I-bank analysts to publish research on IPOs
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80%
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18%
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2%
|
|
5 year SOX exemption (On audits of internal controls)
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74%
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23%
|
3%
|
|
Increased shareholder threshold for private companies (From 500 to 2000)
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66%
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30%
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4%
|
|
Crowdfunding (Can raise up to $1 million via Internet)
|
58%
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32%
|
10%
|
|
Confidential SEC filings (Can test waters up to 21 days prior to road show)
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52%
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40%
|
8%
|
“The JOBS Act was the subject of much debate before it was signed into law and, based on our survey, the investment banking community seems to agree with both the law’s proponents and detractors,” said Brian Eccleston, a Partner in the Capital Markets Practice of BDO USA. “Capital markets executives believe many of the new law’s provisions will have the desired impact of increasing IPO activity, but they also acknowledge that some of the very same provisions open the door to potential scandals. Bankers are particularly divided on how the Act’s relaxed disclosure requirements may impact IPO pricings and whether the confidential SEC filings will have the desired effect of increasing offerings.”
A provision of the JOBS Act allows emerging growth companies to provide less information and requires fewer financial disclosures in their IPO documents and subsequent filings. Although this may make it easier to go public, I-bankers were relatively split on how this provision will impact IPO pricings. Although a slight majority (52%) are not concerned about the impact of the JOBS Act on IPO pricings, this is considered a legitimate concern by the balance of the bankers. Almost half (48%) feel this lack of information will ultimately have a negative impact on IPO pricings.
These findings are from The 2012 BDO IPO Halftime Report, a national telephone survey which examines the opinions of 100 capital markets executives at leading investment banks. The survey is conducted by Market Measurement, Inc., an independent market research consulting firm, on behalf of BDO USA. Executive interviewers spoke directly to capital markets executives within a scientifically-developed, pure random sample of the nation's leading investment banks. The survey was conducted in June of 2012.
BDO USA is a valued business advisor to businesses making a public securities offering. The firm works with a wide variety of clients, ranging from multinational Fortune 500 corporations to more entrepreneurial businesses, on a myriad of accounting, tax and other financial issues.
About BDO USA
BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through 41 offices and more than 400 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of 1,118 offices in 135 countries.
BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information please visit: www.bdo.com.
