Fledgling companies with aspirations of going public got some good news on Friday.
President Donald Trump and the US Treasury department published a report outlining how they want to make it easier for companies to go public. It’s a piece of the financial deregulation that’s been proposed by Trump since he was on the campaign trail — and one that will be welcomed by smaller firms.
Perhaps the biggest Treasury department recommendation for IPO hopefuls — referred to as “emerging growth companies” (EGCs) in the report — involved allowing them to “test the waters” with potential investors before embarking upon the official process.
The Treasury also outlined its view that small, young companies have had “weak” access to capital since the financial crisis, relative to their larger counterparts. The department recommended that rules be modified to broaden eligibility for so-called “smaller reporting companies” (SRCs), which are generally give more time to file reports with the SEC, and are exempt from an external audit.
“The U.S. has experienced slow economic growth for far too long. In this report, we examined the capital markets system to identify regulations that are standing in the way of economic growth and capital formation,” said Treasury Secretary Steven T. Mnuchin. “By streamlining the regulatory system, we can make the U.S. capital markets a true source of economic growth which will harness American ingenuity and allow small businesses to grow.”
In a press release for the report, the Treasury lays out three specific ways to lessen the burden on companies looking to go public and stay public. They include:
- Streamlining disclosure requirements to reduce costs for companies while providing investors the information they need to make investment decisions;
- Tailoring the disclosure and other requirements for companies going public based on their size; and
- Re-examining the JOBS Act to identify how its tools can be improved.
You can read the full report on the Treasury website here.