Facilitating IPOs

In passing the JOBS Act, the House sought to facilitate IPOs.  In fact, there is reason to believe that it does the opposite.  

The legislation seeks to do so by eliminating requirements for companies that have recently become public.  Many of the eliminated requirements (the vote on say on pay) will save little in costs but will remove important protections for shareholders.   

But it got us to thinking about costs.  When Groupon went public in an IPO, it listed the costs associated with the $700 million offering.  The costs included: 

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all expenses to be paid by the registrant, other than estimated underwriting discounts and commissions, in connection with this offering. All expenses will be borne by the registrant (except any underwriting discounts and commissions). All amounts shown are estimates except for the SEC registration fee, the FINRA filing fee and the NASDAQ Global Select Market listing fee.

SEC registration fee			$	87,075
FINRA filing fee			$	75,500
NASDAQ Global Select Market listing fee			$	250,000
Printing and engraving			$	250,000
Legal fees and expenses			$	2,500,000
Accounting fees and expenses			$	1,500,000
Transfer agent and registrar fees			$	10,000
Miscellaneous expenses			$	1,032,428
	Total		$	5,700,000

The amount is not insignificant but it is less than 1% of the amount raised in the offering.  Does this include all of the expenses?  Actually it does not.  The fourteen underwriters for the deal received $42 million, including $17.4 million paid to Morgan Stanley.

Want to adopt legislation designed to faclitate IPOs?   A focus on reducing the costs incurred in connection with the underwriting process might be a good place to start.