To anyone on the CFZ,
**Dozens of quoted US companies are considering going private to avoid new corporate governance legislation and tough disclosure rules introduced by the Securities and Exchange Commission.
Securities lawyers say a number of smaller companies are looking at delisting because of the burdens imposed by the new regulations.
The threat has concerned the Nasdaq market, which is working with the SEC to try to limit the impact on small companies of the Sarbanes-Oxley legislation introduced in the wake of recent corporate scandals.
Charles Nathan, a partner at Latham & Watkins in New York, said Sarbanes-Oxley had "significant liability implications" for smaller companies many of which were already weighing the costs and benefits of retaining the listings.
"It is a lot of straws on the camel's back," said Mr Nathan, whose firm is already advising four Californian software companies about going private.
Benjamin Stapleton, a partner at Sullivan & Cromwell, said: "People have not had to deal with [the new regulations] yet. Some of this stuff, to do right, is going to be a significant cost and headache for smaller companies."
Companies looking to delist are increasingly turning to US private equity firms, which are awash with $100bn of cash.
"We have been receiving calls from smaller public company executives who are looking at going private," said Avy Stein, managing partner at Willis Stein, a mid-market buy-out firm based in Chicago. **
OK, am I all wet here?
Companies, many who might already be dealing with the burden of debt, are going to ask Avy, Charley Nathan, and others, to seek out these US private equity firms (awash with 100b of cash) to borrow "more" (re: debt) to take "their" companies private? Just to avoid the added expense needed to comply with Sarbanes-Oxley?
Thanks for posting Pearly,
Bill/WA |
