For years, as private companies grew and sought to raise funds in the capital markets, they faced significant challenges from the constraints of the rules and regulations administered by the Securities and Exchange Commission.
If a company grew beyond a certain size, it would find itself subject to rules such as reporting requirements under the Securities Exchange Act of 1934 without having made the conscious decision to go public. Even raising capital proved challenging because of the many SEC rules, such as the prohibition on general solicitation when conducting a private offering. With the recession causing businesses to tighten spending and frequently causing small businesses to struggle and ultimately fail, Congress and President Obama have passed legislation with the hope of spurring business and job growth.
