Bill Overview
Title: Middle Market IPO Underwriting Cost Act
Description: This bill requires the Securities and Exchange Commission to study and report on the costs encountered by small- and medium-sized companies when undertaking initial public offerings and certain offerings exempt from securities registration requirements.
Sponsors: Sen. Lummis, Cynthia M. [R-WY]
Target Audience
Population: People associated with small- and medium-sized enterprises (SMEs) globally
Estimated Size: 5000000
- The bill concerns companies undergoing initial public offerings or certain exempt offerings, specifically small- and medium-sized enterprises (SMEs).
- Businesses classified as small- or medium-sized are those with a limited number of employees and income, varying by industry but generally under 500 employees.
- Businesses planning to go public (IPO) are relatively few compared to the total number of businesses, but the number of SMEs is substantially large globally.
- The initiative primarily affects the leadership, employees, and stakeholders of these companies.
Reasoning
- According to the policy details, it primarily affects small- and medium-sized enterprises (SMEs) in the US.
- These SMEs form a significant part of the US economy, but only a subset of them is likely planning an IPO, thus making the directly affected population smaller.
- The budget allows for extensive study and reporting but implies limited direct intervention, focusing on cost analysis for IPOs and exempt offerings.
- Businesses on the verge of going public or planning exempt offerings are likely to experience the most direct impact due to reduced costs or enhanced understanding as a result of the policy.
Simulated Interviews
CEO of a tech startup (San Francisco, CA)
Age: 52 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- The policy is promising as it focuses on reducing costs, which are a major hurdle for us considering an IPO.
- If the report leads to actionable change, it could make IPOs more accessible for companies like mine.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 7 |
CFO of a manufacturing firm (Austin, TX)
Age: 40 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 5/20
Statement of Opinion:
- We frequently use exempt offerings, so insights from this study might help streamline some of our financial processes.
- The direct savings or changes, however, seem indirect for us.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Venture Capitalist (New York, NY)
Age: 33 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 2/20
Statement of Opinion:
- The study could provide valuable insights that improve the market environment for SMEs.
- It might make IPOs more viable as an exit strategy for startups we invest in.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 10 | 8 |
Business Consultant (Chicago, IL)
Age: 48 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- Knowledge from the SEC study could directly translate into better strategies for my clients.
- I expect an improvement in the market efficiency for IPO processes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 7 |
Software Engineer (Seattle, WA)
Age: 29 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 10/20
Statement of Opinion:
- Not directly impacted, but the policy seems like it can make growing a tech business easier in the long run.
- Informed decision-making benefits everyone in the company.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Retired Former SME Owner (Miami, FL)
Age: 61 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 10/20
Statement of Opinion:
- Reducing IPO costs could spare others from the financial strain I faced while running my company.
- Hopeful that the research leads to actionable changes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Financial Analyst (Boston, MA)
Age: 45 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 7.0 years
Commonness: 3/20
Statement of Opinion:
- Access to data from this policy might refine my analysis on which SMEs are ready for public offerings.
- Could positively influence the financial strategies recommended.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 7 |
Tech Entrepreneur (Denver, CO)
Age: 36 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- Gaining insights could be critical for our long-term strategy.
- It potentially makes IPOs more attainable, offering a clearer path for future growth.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Accountant (Los Angeles, CA)
Age: 55 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 6/20
Statement of Opinion:
- Lowering costs related to IPOs can streamline processes for many clients.
- Even if not directly involved in IPOs, the economic ripple effect can be positive.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Owner of a Retail Chain (New York, NY)
Age: 50 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 8.0 years
Commonness: 2/20
Statement of Opinion:
- I'm optimistic about this policy as it might make going public less costly and more efficient.
- It can make the capital raising process less of a gamble for small businesses like mine.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Cost Estimates
Year 1: $3000000 (Low: $2000000, High: $4000000)
Year 2: $0 (Low: $0, High: $0)
Year 3: $0 (Low: $0, High: $0)
Year 5: $0 (Low: $0, High: $0)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- The efficiency and completeness of the study by the SEC will largely drive its potential impact.
- Costs are based on comparable government studies conducted in the past.
- Indirect economic benefits depend greatly on subsequent policy changes or market responses to the study's findings.