How the US government shutdown can affect 2019 IPO's

The government gridlock could adversely affect companies going public this year.

 US stock trader Source: Bloomberg

The prolonged US government shutdown is not only hurting federal workers -it’s also impacting Uber. The carshare company’s initial public offering (IPO) could be delayed because of the government gridlock.

How the US government shutdown affects unicorn IPOs

After Uber, Lyft and other unicorn companies valued in the billions announced they were filing for IPOs, the startups may wait to go public. The US Securities and Exchange Commission (SEC) is postponed from declaring effective statements for registration, which those corporations before the launch of their IPOs. Kathleen Smith, Principal at Renaissance Capital, said that the 20-day government shutdown will create a backlog at the SEC, which will influence the businesses.

‘We think that it probably didn’t matter much during the holidays, but as the government shut down continues into 2019, a backlog is building that will delay the IPO process for companies of all sizes, including the large tech deals such as Uber, Lyft, Slack, Pinterest, etc. that are on file confidentially,’ said Smith.

How the government shutdown impacts smaller companies

In addition to the large companies filing for IPO’s, smaller companies going public could be negatively impacted. Small biotech medical device companies need IPOs for fundraising and the SEC delay could be detrimental. Biotech attorney, Alan Denenberg,noted how the government shutdown affects those businesses.

‘These are not companies who have the luxury of a big balance sheet. They're counting on this IPO as their next financing round to move their trials ahead, do the other things they're planning to do, make filings with the [US Food and Drug Administration] FDA’, said Denenberg.

The government gridlock is affecting workers and companies are being adversely affected. Federal workers and Wall Street are both eager for this stalemate to end.

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