IPOs are down again for the second quarter of 2005 as reported by the National Venture Capital Association. Red Herring cites "flat-lining public markets and rising oil price" as two culprits, but these are just marginal issues that relate to a few possible IPO candidates.
The main cause of falling IPOs remains the chilling impact of Sarbanes-Oxley and the costs it places on reporting compliance for public companies no matter how small. Sarbanes-Oxley can lead to hundreds of thousands of dollars in compliance costs (those lucky accounting firms strike it rich again...) for even the smallest of public companies. It just changes the fundamental economics of an IPO to the point that many are looking for other exit options. One must look no further than the increase in M&A activity to see what is happening.
