Government Shutdown Means Companies Delaying IPO Plans

Chris Gaetano
Published Date:
Jan 9, 2019

With much of the Security and Exchange Commission's staff furloughed during the ongoing government shutdown, many companies have had to delay their plans to go public, as there are not enough staff members to review and approve corporate registration statements such as initial public offering (IPO) filings, according to the Wall Street Journal. While IPOs were allowed to go on during previous shutdowns, that was only because the agency was able to draw on surplus funds to continue operations; this time around, there aren't enough reserves to do so, meaning that for only the fourth time in 24 years, there are likely to be no new IPOs in January. Each of the previous three times this happened—2003, 2009 and 2016—saw extremely weak IPO activity for the remainder of the year. This comes at a time when several prominent companies, such as ride-sharing apps Uber and Lyft, were planning to soon go public. In response, certain companies are seeking alternatives to an IPO should the shutdown continue on much longer, or at the very least delaying their plans. This has had knock-on effects in the banking sector, which have traditionally made billions each year from IPOs, stock sales and convertible debt offerings. While companies can still file, it is unknown how the SEC will prioritize work when the  government reopens. 

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