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Category: SocialMedia

When Will Facebook Have an IPO?

Written on January 04, 2011 by Japhet Writ

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Since the news broke, there have been a lot of questions about the Goldman Sachs' “special purpose vehicle”. Why is Facebook choosing to raise more money through Goldman Sachs? And when will Facebook finally have an IPO?

News are being dominated today with headlines, saying that has raised $500 million from and Digital Sky Technologies. In addition to this, the social network plans to raise another $1.5 billion through ’ “”. This plan, however, raised some questions. The key inquiries are why would want to raise more money through Goldman Sachs? Will finally have an ?

Based on regulation, companies with more than 500 shareholders are required to disclose their earnings to the commission. But Facebook doesn’t want that kind of headache, hence Goldman Sachs came up with a clever workaround — it will represent thousands of investors on their behalf. Simply put, Goldman Sachs is helping Facebook circumvent the system, so there’ll be no need to report earnings via IPO.

But knowing SEC, they could deem Goldman Sachs’ plans. Therefore, the commission will consider all the investors within it as “record owners” of Facebook. If that will be the case, the social network has no choice but to report its earnings. But this is where everything gets interesting. Why would Facebook go through all this trouble if the SEC will shoot them down anyway? The answer is very simple.

Facebook is using this scheme to grow and prepare itself for IPO. With SEC only requiring private companies to report its financial information, 120 days after its current fiscal year, the social network won’t have to IPO until May 2012. When that day comes, Facebook can just go all-in and become a public company.

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  • Ragupathy S P

    facebook ipo will become a smashing hit…

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