The Securities and Exchange Commission’s (SEC)
decision to expand the section of the JOBS Act that allows
companies to gauge interest in potential stock offerings to
include all companies, regardless of size or revenue, has been
widely welcomed by the industry.
Allowing investor input at an earlier stage has no obvious
downsides, sources suggest, and is likely to lead to more
successful initial public offerings, fewer failures, and more
efficient capital raisings.
"Making the 'test-the-waters’ communications
available to a broader group of capital raisers really has no
downside," said Brian Rosenzweig, partner at Covington.
"Increased knowledge on the part of issuers is a good thing,
and increased visibility of investor demand into potential
challenges to a capital raise is a positive," he said. "The net
outcome ought to be, as we have seen with emerging growth
companies (EGCs): fewer failed offerings, more successful
offerings, and more efficient capital...