Mr. Steiner is the Chief Operating Officer and Managing Director – Investment Banking at Ladenburg Thalmann & Co. Inc. The views expressed in this posting are Mr. Steiner’s personal views and should not be attributed to Ladenburg Thalmann & Co. Inc., its employees, affiliates or subsidiaries or to Gunster.
While the Jumpstart Our Business Startups Act (the “JOBS Act”) is a well-intentioned effort to assist smaller companies in their ability to raise capital (and ultimately increase hiring), it falls short with respect to one of the most pressing problems facing capital formation. One can not argue with relaxed rules in several areas such as (i) permitting solicitation for certain private placements; (ii) reducing the reporting requirements for Emerging Growth Companies (generally, newly public companies with less than $1 billion in annual revenue); and (iii) improving the largely unused Regulation A; however, while the burdens of becoming publicly traded have been eased for some smaller companies under the JOBS Act legislation, a major issue that was not addressed is the inability of small and micro-capitalization public companies to fully gain the benefits of their publicly traded status. Or more to the point – it might be easier to go public via the IPO process, but why be public in the first place?
Regardless of size, a company’s status as being publicly traded is an asset. The manner in which a company maximizes the value of its public status is by maximizing the liquidity in its traded securities in the public markets. This results in easier, more predictable capital raising, the ability to use its stock as currency for acquisitions and hiring of key personnel, and less opportunity for “game-playing” by the unsavory Continue Reading GUEST BLOGGER: Tick size remains large obstacle for middle market public companies