More Noise About the Quiet Period

According to Dan Primack, it's time to kill the IPO quiet period because, among other things, "It's time for the SEC to let companies communicate more freely with everyone..." While I am all in favor of making sure the governing rules and regulations align properly with the reality of the marketplace - and always think it's a good idea to see how we can get the government out of the marketplace - I think Mr. Primack has the gun pointed in the wrong direction on this one.

It's not time to kill the quiet period - it's time to (not literally) kill those who insist on putting together unreadable prospectuses filled with industry jargon, legalese, and fill-in-the-box boilerplate pap that make it nearly impossible for investors to get a true sense of the issuer's distinctive value proposition. It's time to treat the prospectus as a marketing tool, not merely a required compliance document. It's time to finally make "plain English" a reality rather than a theory. It's time to focus less on historical/unaudited/pro forma financial results and focus more on the core intangible assets (e.g., innovation/commercialization, management credibility/integrity, corporate reputation, market position, quality of strategy, customer loyalty, governance, CSR, etc.) that will drive results and create future growth opportunities. It's time for the prospectus to directly answer the primary question on every investors' mind - "Why is now the right time for me to take a position in this company?"

As Mr. Primack wisely points out, it's "... too loud a world to keep these [IPO] companies so quiet." But, from where I sit, killing the IPO quiet period will only increase the noise level in and around an initial public offering. I'd rather we focus on improving the quality of the discussion.

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