Good News for Potential IPOs

Late last week the SEC announced the extension of compliance dates for Sarbanes-Oxley Section 404 reports by nonaccelerated filers until their first fiscal year ending after July 15, 2007. This is welcome news for smaller public companies. In addition, the announcement has special significance for private companies contemplating the possibility of an initial public offering within the next 15 months. Because the extension postpones until 2007 the obligation of non-accelerated filers to provide management’s internal control assessment (and the accompanying auditor’s report), it may change the balance of benefits and costs of going public for some companies. This may lead some companies to pursue an initial public offering next year instead of postponing it or following an acquisition exit strategy.