Summary

• One of the commonly stated reasons why companies stay private is the costs (and legal risks) of being public.
• One of those costs is preparing quarterly SEC reports. But there are also costs of preparing for and going public.
• Underwriting dominates the total costs of going public. It also scales with the size of the IPO.
• There are a combination of “fixed costs” that all companies must incur, as well as variable costs that scale with the size of the capital raise - or the complexity of the company. That means large companies pay more in total, but fixed costs might impact small companies more.

By Phil Mackintosh, Nasdaq Chief Economist, and Nicole Torskiy, Director, Economic Research

The U.S. Securities and Exchange Commission (SEC) has a renewed focus on bringing companies to public markets.

They quantified some of the

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