Going Public by Accident (500 Shareholder Threshold) - CFO.com Magazine - 1 Mar 2011

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Going Public by Accident - CFO.com Magazine


 


Going Public by Accident


Private companies may unwittingly find themselves in the public eye when shares are traded too freely.


Russ Banham
- CFO Magazine


March 1, 2011


Facebook has long been associated with a blurring of the line between
private and public. How many people, after all, have joined the
social-networking site in order to tighten their ties to an inner circle
of friends and family, only to find the details of their Bruce
Springsteen obsession or pictures from their latest beach vacation
distributed far more widely than they would like?


Recently, Facebook's finance department encountered similarly
unsought public exposure. For years, the high-growth company has
carefully guarded its status as a private company, despite strong public
interest in its shares. But in late January, in conjunction with a $1.5
billion private placement led by Goldman Sachs, Facebook announced that
it would soon be a de facto public company, as its shareholder ranks
are slated to swell beyond the 500-investor limit for private companies.
By April 2012, Facebook's financials will be out in the open for the
whole world to see, even in the absence of an initial public offering.


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