[veyron]

Mentioned it a few times in other threads, but it clearly needs to be reiterated: http://news.ycombinator.com/item?id=3753915

For posterity's sake let's make this clear: the SEC rule regarding 500 owners is as follows:

> Companies with more than $10 million in assets whose securities are held by more than 500 owners must file annual and other periodic reports. These reports are available to the public through the SEC's EDGAR database.

Source: Securities Act of 1934, paraphrased in http://www.sec.gov/about/laws.shtml

It requires firms to file special reports. The reason why people presume that it means that the firm must go public is simple: there are only a few additional requirements to go public, and the economic advantages in many cases outweigh the paltry effort.

For posterity's sake, this is worth repeating: THERE IS NOTHING FORCING A FIRM TO GO PUBLIC. NOTHING.

[surrealize]

You're missing the point. Facebook might not have been "forced" to go public, but they still don't really need the cash from the IPO. And there are undoubtedly lots of bankers who would kill to be in on the facebook IPO.

So the banker who expected Zuckerberg to bow and scrape was still badly mistaken. Zuckerberg isn't really "asking investors for their money" in the IPO, because he doesn't really need that money. That's the point.

[veyron]

    Facebook might not have been "forced" to go public, but they still don't really need the cash from the IPO

If they didn't need the cash from the IPO why did they IPO? If they wanted liquidity for employees and investors, then they need to go public and hence should at least pay a modicum of respect (guess who is buying those shares that those investors and employees are selling?)

[surrealize]

The people buying the shares are ultimately the public; the bankers are just middlemen, and replaceable ones at that.

If facebook actually did need the cash, why wait until they hit the 500 investor limit? Hitting that limit is clearly playing a role in the timing of the IPO, even if it didn't "force" an IPO.

[veyron]

Facebook as the corporate entity doesn't need the cash; the investors and employees need the exit. In light of that, Mark as an investor and employee does need their cash.

If the exit wasn't important, they would stay private and run the business.

[surrealize]

Sure, the extra liquidity is nice for people who hold shares. But, at the same time, the IPO is clearly not a big deal to Zuckerberg, as evidenced by 1. the fact that they've waited until now, and, yes, 2. by the hoodie.

What's the percentage of firms with >500 investors that don't IPO?

I wonder if increasing the number of investors past 500 is more about using equity as a recruiting/retention tool than it is about cash.

[veyron]

I think you trivialize a very important point, namely that the IPO is a big deal for pretty much everyone (as its used as a recruiting tool for employees and as an exit proposition for VC firms), especially to Zuckerberg (who invariably spun stories of potential exits as part of the process).

I think we can agree on the two facts, namely:

- the firm probably doesnt need the cash

- the members of the firm and investors do want the exit provided by an IPO