But Google's founders have been openly reluctant to rush the IPO process because they risk losing some anonymity, privacy and control. Still, the reporting standard could help speed things along.
"It might compel Google to go out earlier than they want, put a deadline on them," according to one corporate attorney who asked to remain anonymous. "It's a pain in the neck to have the burdens of being a public company without the benefits of a publicly traded stock."
The rule was designed to protect shareholders by requiring disclosure of corporate financial information and risks once a company reaches the size and ownership makeup of a public company, corporate attorneys say. But filing reports to the SEC can prove onerous, and many private businesses carefully watch their stock allotments or repurchase shares to stay under the threshold as a result.
If a company falls within the reporting standard, it would have to first file a Form 10, which is a long description of the business and its officers, similar to an IPO prospectus in terms of the amount of detail required. Following that, it would be required to file forms 10K and 10Q quarterly. These forms include a description of the company's business, financials and risks. It also has to file proxy statements and hold shareholder meetings.
The reporting standard also involves a significant added expense. Corporate attorneys say it can cost in the high hundreds of thousands of dollars for smaller companies and as much as $2m for large companies. Many companies will go public before they have to deal with this reporting standard, they say. Private companies will also want the attention from investors that they get by doing a pre-IPO roadshow, versus disclosing that information to the SEC beforehand.
In the 1990s, Seagate Technology began filing SEC documents because of this reporting standard, but it went private again afterward. Seagate reentered the public market in December 2002.
Google would not comment on financials or factors that could put it in this reporting category. The company has been gearing up to go public, however. In August 2001, it hired former Novell chief executive Eric Schmidt to take the reins from cofounder Larry Page as chief executive, and charged him with shaping the company's strategic vision. This year, it hired Wall Street analyst Lize Buyer, and it has reportedly talked to investment banks in recent months about an offering.
