November 17, 2011 (Mountain View, CA) – Stephen Graham, partner in the Corporate Group and co-chair of the Life Sciences Group with Fenwick & West, was recently quoted in the CFO Magazine article "The True Cost of Being Public: More Than you Think."
The article covers a recent study by Ernst & Young, examining 26 companies that went public within the past two years and the costs associated with their IPOs. The companies surveyed represented a variety of industries such as health care, technology, biopharma, financial services and real estate.
The survey found that going public can add on average $2.5 million to cost structure, with a large portion of that cost dedicated to increased compensation for CEOs, CFOs and other finance professionals. Advisers also command large fees, particularly those who help execute the IPO, with many companies retaining at least 11 third-party advisers.
Stephen Graham is co-chair of the Securities and Exchange Commission's new advisory committee on smaller companies that is examining these kinds of costs associated with going public. He says that such averages shouldn't scare firms away.
"Every company is unique, and some have done better than others in terms of building in efficiencies, getting the right people in place internally, and the right advisers in place externally, to keep costs in check," Graham said. "Being a public company will never be without cost."