What regulation makes it so that a large private company would have to go public? You have it backwards. Increased regulations make it more burdensome for a company to go public, driving companies like OpenAI to remain private. If you made it less expensive and burdensome to IPO (decreased regulation), you would see companies go IPO earlier.

This also coincides with a growing market for private credit and VC which certainly helps companies stay private for longer.

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einszwei an hour ago | parent | next [-]

There was a rule[1] pre-2012 that forced public disclosure (akin to listed companies) for private companies when it had >500 shareholder (which counted employees with shares). This made it so that companies had a choice to stay private with all obligation of public disclosure or go public for added benefit of tapping public market.

In 2012 this was relaxed in JOBS Act which relaxed the 500 threshold to 2000 but more importantly it ignored employees so now private companies of gargantuan trillion dollar valuation and thousands of employees have no disclosure requirements.

So, this is a classic case of regulation that did well but was relaxed and now creates hidden risks.

[1]: https://www.investopedia.com/terms/5/500-shareholder-thresho...

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bko an hour ago | parent [-]

I think they would have kept it under 500 if they had to. I doubt this is the determining factor. In fact a lot more than 2k investors have exposure through SPVs or holding companies on top of holding companies. So no, I don't think this was the determining factor that allowed OpenAI to stay private longer.

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einszwei 40 minutes ago | parent [-]

I disagree. Not counting employees as shareholders was the main kicker. There was a reason Google and Meta went public so early in their growth story.

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bko 20 minutes ago | parent [-]

Seems really unfair to early stage employees as without this they would be much less likely to receive equity from employers. I guess it would force some companies to go public earlier but at the expense of employees who would get virtually none of the upside, and startups can't compete for talent.

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Yizahi 9 minutes ago | parent | prev | next [-]

> What regulation makes it so that a large private company would have to go public?

My guess would be - oxytocin, cortisol and dopamine regulation, or rather the failure of said regulation.

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jcranmer an hour ago | parent | prev | next [-]

Regulations that limit the ability of investors to invest in private companies, although these have been weakened in recent decades, which helps fuel the growth of private credit markets that allow private companies to stay private.

I'd say it's the growth of private markets to allow companies to keep getting funding even at the $100 billion range while staying private that has fueled the trend to stay private rather than SOX and other new regulations for public corporate governance dissuading them from going public.

	▲	gruez an hour ago \| parent [-]
		>Regulations that limit the ability of investors to invest in private companies, although these have been weakened in recent decades, which helps fuel the growth of private credit markets that allow private companies to stay private. Which regulations are these?

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iwontberude an hour ago | parent | prev [-]

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