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Public to Private: Current Market Trends

The number of public companies calling it quits and going private is increasing, just as the number of companies going public has decreased. The figures are staggering! With the crippling Sarbanes-Oxley changes and the added expense of new compliance regulations, more and more public companies are thinking about going private. Should you? This six-page white paper is a must for any officer, director or manager of an OTCBB traded company bearing the brunt of the market uncertainty in the wake of these changes. This tome profiles companies likely to be successful utilizing this strategy as well as advantages and disadvantages of same, as well as why many companies are opting out.




Should Your Public Company Go Private?

Circumstances Creating the Going Private Trend

The number of companies going private is increasing, just as the number of companies going public has decreased. With the Nasdaq Composite Index dipping more than 70 percent since its high of 5,048 in March 2000 and today's increasingly complex and expensive corporate regulatory environment, more and more public companies are thinking about going private.

The Sarbanes-Oxley Act of 2002

Fueling this exodus from the public market, in part, are the onerous regulations embodied in the Sarbanes-Oxley Act, (or Sarbox), of 2002. Recent filings with the SEC clearly illustrate that the new legislation drove many companies out even before the rules were finalized. Nationally, 46 companies have filed with the Securities and Exchange Commission to go private since the fourth quarter of 2002.

President Bush signed the Sarbanes-Oxley Act into law in July 2002 with the hope that it would put an end to the mounting corporate scandals and accounting misdeeds in the U.S. Included in the Act are:
  • New rules regarding the structure and role of the audit committee
  • Severe criminal penalties upon corporate officers for securities fraud violations, false CEO/CFO certifications, mail and wire fraud violations and retaliation against whistleblowers
  • Certification - a public company's CEO and chief financial officer must certify that its 10-K and 10-Q filings with the Securities and Exchange Commission (SEC) "fairly present, in all material respects, the financial condition and results of operations of the issuer."


Sarbanes-Oxley also increased a public company's disclosure obligations and shortened its reporting timelines, thereby placing increased pressure on companies. Compliance with this act is an enormous burden for smaller companies and has resulted in increased legal and accounting costs exceeding $1 million annually in some cases.

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 CAPITAL MARKETS
   Pink Sheets
   OTCBB

 BASIC BUSINESS SAVVY
   Advanced Financial Topics

 GOING PUBLIC
   Steps in the Process
   Requirements of Public Companies
   Tools & Templates
   Specialists

 REPORTING & COMPLIANCE
   Staying in SEC Compliance
   New Sarbanes-Oxley Regulations
   Structuring Your Company
   Tools & Templates

 GETTING FUNDING
   Preparing Your Business
   Finding Investors
   Pitching Investors

 FOREIGN COMPANIES
   Taking a Foreign Company Public

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