Facebook Will File for an IPO w/in 12 Months
I came aross an old CNET article from Dec ‘03 that predicted Google would most likely go public ’soon’ due to an obscure SEC rule.
Securities law requires private companies that exceed a certain level of stock distribution to file quarterly financial data with federal regulators. If the law is applied to the popular search engine, Google executives would have to disclose the company’s closely guarded financial information, and it could ultimately play into the decision on whether or when to take the company public.
A private company must report its finances once it has more than 500 common shareholders–or stock-option holders–and $10 million in assets, according to section XII(g) of the Securities and Exchange Act of 1934. That means a private company must file quarterly forms with the Securities and Exchange Commission (SEC) that disclose operating expenses, profits, partnerships, shareholders and many other details–a laborious process that can cost as much as $2 million annually. ..
SEC standards require that qualifying private companies report within four months of the end of their calendar year, which in Google’s case is April.
If I were to fashion a guess, considering Facebook’s aggressive hiring rate, I’d say they’ll cross the 500 mark this year (2008). Seems reasonable that ~450 employees will have vested some amount of stock options by 12/31. Adding to that number other investors, outside shareholders, etc, the 500 threshold is very likely to be exceeded.
The biggest question then becomes when is Facebook’s fiscal year end? If set to the calendar year, and they do indeed exceed the shareholder minimum, an IPO filing before May 1st 2009 would be very, very likely. Of course a company in this situation isn’t required to go public, they just have to report quarterly financials and comply with many of the same guidelines as public companies. It’s very unlikely Facebook, or anyone else, would carry that burden without getting the potential reward a public offering would provide.
Certainly will be interesting to watch.
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[…] Jason wrote an interesting post today on Facebook Will File for IPO w/in 12 MonthsHere’s a quick excerptIf I were to fashion a guess, considering Facebook’s aggressive hiring rate, I’d say they’ll cross the 500 mark this year (2008). Seems reasonable that ~450 employees will have vested some amount of stock options by 12/31. … […]