Middle Market Ipo Cost Act

Floor Speech

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Mr. HILL of Arkansas. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3395) to require the Comptroller General of the United States to carry out a study of the costs associated with small- and medium-sized companies to undertake initial public offerings, as amended.

The Clerk read the title of the bill.

The text of the bill is as follows: H.R. 3395

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.

This Act may be cited as the ``Middle Market IPO Cost Act''. SEC. 2. STUDY ON IPO FEES.

(a) Study.--The Comptroller General of the United States, in consultation with the Securities and Exchange Commission and the Financial Industry Regulatory Authority, shall carry out a study of the costs associated with small- and medium- sized companies to undertake initial public offerings (``IPOs''). In carrying out such study, the Comptroller General shall--

(1) consider the direct and indirect costs of an IPO, including--

(A) fees of accountants, underwriters, and any other outside advisors with respect to the IPO;

(B) compliance with Federal and State securities laws at the time of the IPO; and

(C) such other IPO-related costs as the Comptroller General may consider;

(2) compare and analyze the costs of an IPO with the costs of obtaining alternative sources of financing and of liquidity;

(3) consider the impact of such costs on capital formation;

(4) analyze the impact of these costs on the availability of public securities of small- and medium-sized companies to retail investors; and

(5) analyze trends in IPOs over a time period the Comptroller General determines is appropriate to analyze IPO pricing practices, considering--

(A) the number of IPOs;

(B) how costs for IPOs have evolved over time for underwriters, investment advisory firms, and other professions for services in connection with an IPO;

(C) the number of brokers and dealers active in underwriting IPOs;

(D) the different types of services that underwriters and related persons provide before and after a small- or medium- sized company IPO and the factors impacting IPOs costs;

(E) changes in the costs and availability of investment research for small- and medium-sized companies; and

(F) the impacts of litigation and its costs on being a public company.

(b) Report.--Not later than the end of the 360-day period beginning on the date of the enactment of this Act, the Comptroller General of the United States shall issue a report to the Congress containing all findings and determinations made in carrying out the study required under subsection (a) and any administrative or legislative recommendations the Comptroller General may have.

Mr. Speaker, I rise in support of H.R. 3395, the Middle Market IPO Cost Act. Currently, companies have two options for raising capital: an initial public offering, an IPO, or a private offering. Fewer companies are choosing to take the IPO path because of the up-front costs of going public, as well as the high operating costs public companies experience due to SEC reporting rules.

Before a company files for an IPO, they often spend tens of millions of dollars to gather and compile information to submit to the SEC. These mandatory information requirements exclude or dissuade many companies from even considering an initial public offering.

The study required by Mr. Himes' bill will help Congress and the market better understand the costs associated with small- and medium- sized companies going public through the IPO process.

I urge all my colleagues to join me in supporting this bill, and I reserve the balance of my time.

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Mr. HILL of Arkansas. Mr. Speaker, I include in the Record the CBO estimate for this bill. H.R. 3395, MIDDLE MARKET IPO COST ACT, AS REPORTED BY THE HOUSE COMMITTEE ON FINANCIAL SERVICES ON JUNE 3, 2025 ------------------------------------------------------------------------ By fiscal year, millions of dollars-- ------------------------------- 2025 2025-2030 2025-2035 ------------------------------------------------------------------------ Direct Spending (Outlays)............... 0 0 0 Revenues................................ 0 0 0 Increase or Decrease (-) in the Deficit. 0 0 0 Spending Subject to Appropriation * 1 ** (Outlays).............................. ------------------------------------------------------------------------ * = between zero and $500,000. ** = not estimated.

Increases net direct spending in any of the four consecutive 10-year periods beginning in 2036? No.

Increases on-budget deficits in any of the four consecutive 10-year periods beginning in 2036? No.

Statutory pay-as-you-go procedures apply? No.

Mandate Effects:

Contains intergovernmental mandate? No.

Contains private-sector mandate? No.

H.R. 3395 would require the Government Accountability Office (GAO), in consultation with the Securities and Exchange Commission and the Financial Industry Regulatory Authority, to study and report to the Congress within one year of enactment on the costs small- and medium-sized companies incur when conducting initial public offerings (IPOs). An IPO is a process where a private company offers shares to the public for the first time, making it a publicly traded company.

Based on the cost of similar activities, CBO estimates that implementing H.R. 3395 would cost $l million over the 2025- 2026 period. Any related spending would be subject to the availability of appropriated funds.

The CBO staff contact for this estimate is Matthew Pickford. The estimate was reviewed by H. Samuel Papenfbss, Deputy Director of Budget Analysis. Phillip L. Swagel, Director, Congressional Budget Office.
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Mr. HILL of Arkansas. Mr. Speaker, I urge a ``yes'' vote from both sides of the aisle, and I yield back the balance of my time.

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