One of the motivating factors driving some companies to go private is compliance with Sarbanes-Oxley. The Securities and Exchange Commission voted this past week to extend the amount of time small businesses have to comply with Sarbanes-Oxley rules. According to the Washington Post:
“A small-business advisory group created by the SEC had pushed for a delay in the control rules mandated by the Sarbanes-Oxley Act. Under the plan, public companies with a market capitalization of less than $75 million will have until July 2007 to review their financial controls.”
This decision could slightly impact some of the going private transactions that are currently in process and could slightly reduce the number of future going private transactions that are proposed. The delay may reduce the cost of compliance by lowering the immediate demand for compliance services. This is the second time that an extension has been approved for small business compliance. I believe that the first extension coincided with some of the canceled going private transactions that occurred earlier this year.
Since I have been actively involved in investing in these small companies that are proposing to go private, I have tried to keep track of developments concerning Sarbanes-Oxley. The Sarbanes-Oxley News blog appears to be a good resource to keep track of new regulatory developments.