I did a piece over the weekend in the Wall Street Journal about the anti-Sarbanes Oxley crowd’s attempt to pin the blame for a slowdown in IPOs on costs associated with the four-year-old law.
To repeat what I wrote, “Has anybody stopped, for just a moment to ask whether fewer IPOs might actually be a good thing? Seriously, maybe some of these companies shouldn't go public in the first place, especially if they fear or don't want to pay for laws that are attempting to crack down on skullduggery.”
As I noted in the piece, a year after debut, many IPOs end up trading below their offer price. Who can forget the late 1990s, when a number of ballyhooed IPOs simply disappeared not long after hype-packed openings?
The reality in this situation, I pointed out, is that the real spoiler in IPOs may very well be private equity, which has gobbled up some of these companies pre-IPO in hopes of taking them public at some point in the future. All the more reason, I noted, that Sarbanes Oxley is not just a good thing for investors but a convenient scapegoat, as well.