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Twitter IPO Unlikely as Government Shutdown Slows SEC

Douglas A. McIntyre

Rumors spread that Twitter would file its initial public offering (IPO) papers with the Securities and Exchange Commission (SEC) this week. The likelihood of that has died as the federal government prepares to shut down. Companies may still be able to file documents with the SEC, but the agency will not approve or deny them for the time being. Twitter's management and bankers are too smart to file when the government is in chaos. The focus on the IPO application and what it means to Wall Street will be undermined.

The Twitter delay shows the extent to which planned publicity around government relations can dissolve when the spotlight turns from companies that need to do federal business to the federal government itself. Better to hang on to exciting news until the excitement can move back in Twitter's favor.

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Imagine if Facebook Inc. (FB) had elected to filed its IPO documents with the SEC during a lull, when the agency's doors were barely open. The S-1 may not have been posted at the SEC.gov website at all. The clerks and other minions who do this kind of work will be at home, hoping that the government will be reopened with legislation that gives them back pay. Otherwise, these workers may be left with bills to pay and no money with which to pay them. It is another part of the fallout that could hurt gross domestic product (GDP) improvement, if the Congress and White House cannot reach a compromise soon.

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Twitter management and bankers are unlikely to be concerned with the delay. Based on almost any information regarding the cash on Twitter's balance sheet, it will be months before it needs money for operations. A huge expansion of its business or any mergers or acquisitions will have to be put off. However, this is not likely to affect the social network's long-term future.

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Finally, Twitter has been warned, based on when the Facebook IPO came to market, well after it filed its first documents with the SEC, that the longer bankers, chief financial officers and exchanges have, the better prepared they will be for the first day of trading. That observation may be nothing more than amusing, but there is a tiny truth in it.

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Twitter will not file its IPO documents with the SEC this week, and not until the SEC has been open long enough to get its house back in order. There is no reason for Twitter to start the process in the middle of a catastrophe.

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