On June 5, the U.S. House of Representatives passed a bill authored by Congressman Jim Himes that would require the Government Accountability Office to study and report on costs incurred by small and medium-sized companies taking on initial public offerings.

Referring to legislation signed into law by President Barack Obama in 2012, Mr. Himes said, “The JOBS Act [Jumpstart Our Business Startups] did good work to reduce the cost and friction associated with the undertaking of an IPO, but the actual cost of going public has not budged from seven percent in decades.”

“That means small and mid-sized companies hand over millions of dollars to underwriters when they go public — a serious cost for many of these young companies.”

If it eventually becomes law, H.R. 2812, the Middle Market IPO Underwriting Cost Act, would require the GAO to study the direct and indirect costs of an IPO and analyze how they have evolved over time, including fees paid to underwriters, investment advisory firms, and other professions.

The purpose, said Congressman Himes, is to “better understand where these costs are coming from, what drives them, and what might be done to try to make the IPO market more competitive and reduce costs for companies trying to access our capital markets.”

A PDF copy of H.R. 2812 can be viewed and downloaded here.