Companies consider IPO workaround as shutdown drags on
Some companies looking to go public this year are contemplating a workaround as the partial government shutdown drags on into its fourth week.
At least two biotech companies are weighing alternative options while the SEC remains largely closed, people familiar with the matter told The Wall Street Journal this week.
During the IPO process, companies typically have regular exchanges with the SEC, which ultimately gives them the greenlight to move forward. However, there is another legal option that would allow businesses to bypass some parts of the standard process, pick a price and then move directly to market at that price 20 days later.
While the method is legal, it could invite increased risk as it’s difficult to predict how the market will act during those 20 days. Normally, companies are priced the day before a listing. Also, as noted by the Journal, it raises concerns the companies could be more susceptible to regulatory, or other, challenges later on.
A number of companies are rumored to be considering an IPO in 2019, including ride-sharing companies Uber and Lyft, workplace messaging company Slack and apartment marketplace Airbnb.
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For businesses that are looking to go public in early 2019, the deadline to do so is typically mid-February, according to the Journal, since it allows them to use financial results through the third quarter of 2018.
The partial government shutdown – the longest in U.S. history – has entered its fourth week, affecting hundreds of millions of workers. The political infighting was triggered by a disagreement over funding for a wall along the country’s southern border. Over the weekend, the president appeared to offer Democrats an olive branch in the form of temporary protection for some undocumented immigrants in exchange for the $5.7 billion he wants to build the wall. House Speaker Nancy Pelosi, D-Calif., however, did not bite on the offer.