Most studies of the costs associated with initial public offerings focus on the dollars it takes for newly public companies to comply with everyone’s favorite scapegoat, the Sarbanes-Oxley Act. According to conventional wisdom, it’s those compliance costs that are holding back companies from going public and choking up the capital markets in general.

But a new survey from Ernst & Young takes a broader approach. Based on data from 26 companies that went public in the past two years, the survey finds that there’s also a hefty price tag attached to compensating officers and directors post-IPO, along with other newly useful advisers. In the sample, company revenue size ranged from below $100 million to more than $4 billion, and industries included health care, real estate, biopharma, technology, industrial products, financial services, retail, and manufacturing.

Being public adds about $2.5 million, on average, to a company’s cost structure, with $1.5 million of that devoted to higher compensation for CEOs, CFOs, and others in the finance function, such as investor-relations professionals, according to the survey. That figure also covers increased board costs, as more than 80% of companies had either added new members to their boards of directors or increased director compensation prior to their IPO.

Indeed, Angie’s List, which went public this week, notes in its S-1 filing that it boosted executive cash compensation to hit the 75th percentile, based on a study of other pre-IPO companies, in advance of its offering. “As part of the compensation committee’s comprehensive review of executive compensation levels during July 2010, we found that our base salaries generally fell significantly below the median in both of our pre-IPO and public companies studies,” according to the S-1. As a result, Angie’s List made “significant increases in recognition of both the growth of our company over the last few years and the efforts that would be required of all our executive officers as we began to move toward becoming a public company.”

Another $1 million goes annually to advisers, on top of a whopping average of $13 million spent on advisers who help execute the IPO, according to E&Y’s survey. Most companies retained at least 11 third-party advisers in connection with the IPO, the survey found, including, universally, investment bankers, attorneys, and auditors. About 70% of companies hired an investor-relations firm, while 40% hired a road-show consultant.

Those finding are in line with the results of a recent survey by Protiviti, which found that compliance costs tend to be highest in the first year of being public, then fall to a range of $100,000 to $1 million annually.

Such averages shouldn’t scare firms away, say experts. “Every company is unique, and some have done better than others in terms of building in efficiencies, getting the right people in place internally, and the right advisers in place externally, to keep costs in check,” says Stephen M. Graham, an attorney with Fenwick & West. Graham is the co-chair of the Securities and Exchange Commission’s new advisory committee on smaller companies that is examining such costs. “Being a public company will never be without cost,” he says.

Indeed, one CFO says that numbers can’t capture the full toll. “The bigger cost is that as a public company you’re constantly considering what impact your decisions will have on your stock price,” says Roger Moody, CFO of Nanosphere, which makes advanced diagnostic tests for hospitals. Nanosphere trades on Nasdaq, with about a $70 million market cap at press time. “You have to consider the time it takes management to articulate the story and keep investors apprised of those decisions,” says Moody, who estimates that about 30% of his role is focused on such activities.

Still, by Moody’s calculations, the costs are well worth it. Equity offerings are one of the few avenues for companies that need “large amounts of money,” he says. Nanosphere, which has yet to turn a profit, went public in 2007 and has completed two follow-on offerings since then. “That money has allowed us to work on multiple fronts,” says Moody. “If we hadn’t completed those, we would not be able to work as broadly.”

Technology was also a key area of IPO-related spending, though the E&Y survey did not quantify the costs. Eighty percent of the companies surveyed said they made new investments in IT or software as they prepared to go public, with a quarter buying a new ERP system specifically.

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