silicon valley

IPO window opens for tech companies

Tue, 08 Jan 2008 06:59:59 -0500

The old saw in Silicon Valley is that Sarbanes-Oxley has made the public offering less attractive as an exit option. But that seems to be changing. The New York Times notes data from the National Venture Capital Association and Thomson Financial showing 27 offerings of venture-backed companies in the last three months. That rekindles memories of the heady days of the late 1990s. So what's up? The industry seems to have adjusted to Sarbox. The costs are not trivial but must be weighed against the liquidity gains, which once again are starting to look really good. Deep down, many prefer an IPO to a corporate sale.

For more:
- here's the New York Times article

Silicon Valley boards reshaped by Sarbox

Tue, 11 Dec 2007 06:59:59 -0500

Five years after Sarbanes Oxley, companies in Silicon Valley have reshaped their boards, according to the San Jose Mercury News. Nearly all have a director with financial expertise in their audit committees, compared with 11 percent in 2003, a stat that seems shocking in retrospect. Outside directors account for nearly 85 percent of the total, up from 75 percent in 2003. And more than two-thirds have separated the CEO and chairman job. To some extent, this works against the stereotype that Valley companies pack their boards with cronies. There are some questions to be answered. Does all this make the boards more effective? When it comes to compliance and rules, yes. But I'd like to see more companies start strategy committees.

For more:
- here's the article

Related articles:
- Silicon Valley activity on the rise
- Effect of Sarbox in Silicon Valley debated

Has Sarbox really gutted the VC industry?

Tue, 09 Oct 2007 06:59:59 -0400

Business Week Online takes a look at the VC industry, and notes there are some bright spots but also some "disturbing trends." Consider exit IPOs. While the market is hot, the offerings are from "one-off companies that were founded years ago and have slogged away at building solid businesses for a half-decade or more." Now, there are those who would argue that's how it was always meant to be. There are a lot of funds still available without IPOs which are about as rewarding as the original investors than financing growth. Innovation is hard but I do not think frontier industries are going without funds or exit opportunities. True, the bar has been raised, but that's a good thing.

For more:
- here's the Business Week Online article

Does Sarbanes Oxley really inhibit small companies?

Tue, 02 Oct 2007 06:59:59 -0400

Sarbanes Oxley gets tossed around a lot as the reason for small-company woes. Anytime there's a delisting, you can bet "the additional costs of Sarbanes Oxley" gets ritualistically trotted out. But Silicon Valley and much the tech industry is thriving all over again. Investment bankers have certainly taken notice. These companies of course are not going public in the volume they did in the dot.com era, but I think we can agree that's a good thing. These days, if you are going to go public these days, you have to have your ship in top shape. Earnings certainly helps. Perhaps that's how it should be. In the end, investors just might appreciate it. I haven't seen any rigorous analyses of aftermarket performance since Sarbox became law. But it would be interesting to see, though isolating the effects of the law may be difficult.

For more:
- here's an article from EDN

Related articles:
- More on small accounting companies and Sarbox
- Small company compliance timeline issue heat up
- More AS5 tips for small companies

Brocade verdict to embolden prosecutors?

Tue, 14 Aug 2007 06:59:59 -0400

The conventional thinking on stock options backdating cases was that prosecutors would have the best shot at companies that continued their shenanigans after Sarbanes-Oxley became law. Recall that Sarbox requires that executive (not rank and file) option grants must be reported within two business days of the grant date. But the Brocade decision really may change that. The prosecution won without airtight evidence, and Business Week Online says that the case "sets a low bar for prosecutors to clear, should they decide to bring more cases." Needless to say, fear is mounting in Silicon Valley and elsewhere. It's way beyond a civil issue now. CEO Greg Reyes faces up to 20 years in prison. It is critical that you leave no room for doubt with your grants. You need to do more than go by the book. Even appearances can be damning as Reyes supporters would say.

For more:
- here's the article

Datacenter shortage looms

Mon, 28 May 2007 20:01:39 -0400

You may want to check on your datacenter capacity before it turns into a problem. Here's some background: We've discussed before that data centers have made a huge comeback in recent years. Demand has soared, thanks in large part to Sarbanes-Oxley and various privacy laws, which have made companies downright obsessed (understandably) about document retention. But datacenter costs are soaring and potential shortages of capacity loom, especially in hotbeds like Silicon Valley and the Washington, DC area. According to new research by Tier1, datacenter demand is up 13 to 14 percent, while supply has increased just 4 percent. Construction is really lagging at this point. This could easily creep up on you. You would be wise to think about what the shortage means to your compliance initiatives, especially in the area of continuity.

For more:
- here's a release

Data centers are hot again

Mon, 09 Apr 2007 20:01:39 -0400

The bandwidth needs of companies are growing, seemingly geometrically. Corporate websites are more complex and the regulatory need to preserve more records are pushing the IT needs to new levels. We've noted that the storage market has really taken off, thanks mainly to Sarbanes-Oxley. One consequence of this is that data centers are hot all over again. In cities across the country, you'll likely see more articles like this one, about the rise of a new center in Baltimore. In Silicon Valley, people are buzzing about a mammoth new structure that is thriving after it was all but abandoned in 2000. Such centers are attracting a lot of investment money these days. Of course, whether such centers are right for you requires some research. There are some tricky compliance issues, we've noted before.

For more:
- here's an article from the San Mateo County Times

Effect of Sarbox in Silicon Valley debated

Mon, 22 Jan 2007 19:01:39 -0500

We tend to stay focused on some pretty narrow, almost niche issues. But everyone now and then it's nice to take a step back and gaze through a larger window, such as the effect of Sarbanes-Oxley on Silicon Valley. We've heard often that the law is strangling small start-ups, but a new twist was added when Jim Clark resigned from Shutterfly. He cited constraints that stem from his dual role as large shareholder and chairman. Many started to question whether we'll see more of this, given that lots of shareholders sit on start-up boards. Recall that Tim Draper, of Draper Fisher Jurvetson, also dropped off several boards, citing Sarbox. My view is that if we were going to see this happen in droves it would have happened already. That said, Sarbanes-Oxley is always a good reason to give when making a major move; it sends a certain message and grabs attention.

For more:
- read this CNET article

More execs to quit in face of Sarbox?

Mon, 15 Jan 2007 19:01:39 -0500

Sarbanes-Oxley can now claim a big-name victim: Jim Clark. Remember him? The co-founder of Netscape Communications and one of the best known entrepreneurs of that era? He has quit as chairman of Shutterfly, blaming Sarbanes-Oxley for making his job un-doable. After all the rules are accounted for, he wrote in his resignation letter, "what's left is liability and constraints on stock transactions, neither of which excite me." Well, the rules, especially for small companies, are being eased somewhat. But the law is of heightened concern in Silicon Valley. He is not alone in his disgust for the law. Still, I doubt that others will take such drastic steps. Clark also noted that he no longer considered himself a good fit for the company.

For more:
- read this New York Times article

ALSO NOTED: Novel idea: Why not make Sarbox compliance voluntary?; Financial managers in demand in Silicon Valley;

Mon, 04 Sep 2006 20:01:38 -0400

> White-collar prosecutions have declined significantly during the past four years. The result of Sarbox? Or is homeland security a bigger prosecutorial priority? Article

> Novel idea: Why not make Sarbox compliance voluntary? Article

> Financial managers in demand in Silicon Valley. Got Sarbox experience? Article

> The costs vs. the benefits has been debated for a while now. Investor confidence may be up. Processes have been improved. But have returns actually improved? It doesn't seem that way yet. Article

> Financial executives are surprisingly amenable to more financial regulation, according to one survey. Article

> Profits prove elusive for plaintiffs' lawyers in options scandals. Article

> New book by ex-audit director offers Enron analysis. Release

> BNA to launch new accounting series, eye on post-Sarbox era. Article

> Is Sarbox a convenient scapegoat? It sometimes seems that way. Article

And finally ... When moms go back to work. Article