On Tuesday, the U.S. House of Representatives passed a small-business exemption to the Sarbanes-Oxley accounting rules, permanently waiving the audit requirements for all companies with market caps under $75 million. Venture capitalists and entrepreneurs have long bemoaned the newly repealed requirements, which were intended to prevent Enron-style scandals in big companies, but have also contributed to the IPO drought among small ones. The exemption, somewhat surprisingly urged by White House Chief of Staff Rahm Emanuel in order to pass a broader regulatory overhaul bill, could widen the IPO gate.
Couple that with the unusual form of Open Table’s IPO–they sold only three million shares on opening for a total of $60 million; 18 million are still owned by investors and other insiders.
$60 million raised and only 14% of the ownership floated–that’s like a big D Round. But Open Table does come away with some incredible branding as the Tech Company That Beat The Drought. This was perfect timing to pour the marketing budget into accounting to make the IPO happen.
Between Open Table’s precedent and permanent SarbOx relief, I’m wondering if the SMB IPO will become standard practice.
