Facebook's Pressure to IPO

http://dealbook.nytimes.com/2011/11/29/facebook-may-be-forced-to-go-public-amid-market-gloom/?emc=eta1

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"It isn't what people think that is important, but the reason they think what they think." (Eugene Ionesco)

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As the folks at "DealBook" pointed out today, Facebook my have to IPO in April, 2012 whether the IPO market is good by then or not.

Two major events are causing this.

Long-time employees have been exercising their options and selling their shares in large quantities on private markets. New shareholders count toward the 500 investor threshold that the SEC uses for requiring public reporting of key data.

In addition, the January deal where Facebook arranged to sell $1.5 billion in shares through Goldman Sachs to new investors has pushed the SEC to see an implication that a vehicle created to sell to multiple investors but only count as "one" investment unit of the 500 SEC limit stretches credulity. Still Facebook is required only to begin reporting and filing information with the SEC at the end of April. The company is not legally required to go public and list shares at that time. Of course, if a company is going to be subject to much of the regulation that comes with being public, they might as well go ahead with an IPO and get the full benefits of being public.

In 2004, Google had the same problem.

Facebook should go public early next year but those who see their valuation potential at $100 billion might be disappointed.