Mary Johnston: Going Public With Your Startup in Utah

One writer for Forbes is brave enough to tell it straight: the gap between the “instant zillionaires” who build their own companies from the ground up and the painstaking—and legally entangled—process of launching a successful business into the public realm is enormous. A business attorney in Salt Lake City is familiar enough with the “sobering story” the law textbook relates, but the flashy emergence of wealth from garage-and-basement offices like Apple’s story have become the stuff of legend. So which is it? Or is there a middle ground?

Going public can indeed be “messy and expensive,” with hours of time and headaches consumed by filings, disclosures, holds on stock activity, but it may not have to be that way. A business attorney in Salt Lake City that is well-versed in the securities regulations businesses would advise a business to go public only once they’ve reached their ready point, and like Forbes, he would remind CEOs that “it doesn’t have to be an all-or nothing decision between going public and staying private.”

The Securities and Exchange Commission does seem to put a damper on the idea of going public, what with their “arcane process” for registering stocks and bonds, as well as reporting in their infamous EDGAR database. The cost of managing these regulations can be cost prohibitive for a small business with or without the services of a business attorney in Salt Lake City.

But there may be another way. The 2012 JOBS Act, standing for Jumpstart Our Business Startups Act, made raising capital of up to amounts under $1 million through crowdfunding activities online much easier and requires much less reporting. Utah business lawyers familiar with securities law would advise their clients, too, that there are “break points” of $5 million and $50 million thresholds, below which companies can avoid some of the more “onerous registration and reporting requirements” in selling to the public.

A business attorney in Salt Lake City might also counsel a new company to consider selling to investors exempt from many of the reporting requirements, that is, accredited investors (the guys who we think of as “millionaires” and professional investors) and institutional investors. This option lets your company grow before your cousins and their girlfriends want to purchase stock. Fewer is better at first, too—Are there less than 35 investors? You might be able to get the SEC off your back by staying small in your scope, and there is a friends and family exemption in the rule books, so your cousins might be able to get in on the deal more-or-less free of charge (though their girlfriends are an iffy bunch).

All in all, though, securities laws are ridiculously complex, and our bet is that even if you’re a whiz at the business side of things, your head is spinning when you contemplate all the SEC regulations of going public. That’s when you call on a friend—or an attorney—because American laws shouldn’t inhibit economic growth. Don’t let the man get you down.