Schumer, Toomey Aim To Help Small Businesses Go Public

By Adrianna McGinley

Sens. Chuck Schumer (D-N.Y.) and Pat Toomey (R-Pa.) introduced bipartisan legislation Thursday they say will create jobs by facilitating the private-public transition for small businesses.

The duo agreed small and medium size businesses are essential for economic recovery, yet face tough obstacles when pursuing an initial public offering (IPO).

“Capital formation and access to capital is the single biggest and most important factor in driving economic growth and job creation,” Toomey said. “Without a doubt one of the very best and most efficient sources of capital is the public equities market, well you can’t access the public equity markets until you do your IPO.”

With the number of IPOs declining in recent years, the legislation would create a temporary “on-ramp” for small businesses to go public, phasing in costly IPO regulations as the business grows.

A new category of “emerging growth companies”, with less than $1 billion in annual revenue and $700 million in publicly traded shares, would be created. The companies would have a maximum of five years to make the transition, which could be cut short should the company meet either of the limits set forth.

Roughly 11 to 15 percent of companies, at any given time, would be eligible for the program, Schumer said, and with 79 percent of companies reporting lack of access to the IPO market for small companies and 90 percent of job creation occurring post IPO, this type of legislation “should be our focus.”

The Democratic senator cited LinkedIn as an example of a small company that has doubled its workforce since going public in May and expects many others would follow under the new program.

“The NYSE said the bill ‘would have the largest impact’ on job creation when compared to several similar proposals that have been debated,” Schumer cited.

On top of having bipartisan congressional support, the legislation was approved by the NY Stock Exchange, NASDAQ, and the IPO Task Force.

“We hope that this nice little proposal can help bridge the partisan divides in the Congress and have a real impact on job creation,” Schumer said. “We tried to take the things where you get the most bang for the buck, the least opposition, and ability to get something done.”

“I’m often asked…is there anything you guys can agree on,” Toomey added. “Here’s an example of something very specific, very concrete, very constructive, and very pro-growth on which we do agree…This is just a very constructive thing we can do, it’s not going to cost the taxpayers a dime, and it is assuredly going to create jobs.”