Going Public Getting Harder

The San Francisco Chronicle reports that a growing number of entrepreneurs, faced with spiraling accounting costs and stiffer corporate governance rules, are choosing to keep their startups private or sell them to a rival rather than take them public.

The article tells the story of one entrepreneur who decided to sell his company, Tickle Inc., instead of going through the IPO process. The decision to go public has changed because the costs of being a public company have more than doubled in the last three years, according to securities attorneys, venture capitalists and startup CEOs. Such decisions have become more challenging in the last two years as the costs of being public have gone up to between $2 million and $3 million. The bulk of the increase is the higher expenses for auditing and other accounting services required by the Sarbanes-Oxley Act of 2002.