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Shell Shock?

New rules are driving small firms into shells, where they could get a nasty surprise.

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This story appears in the December 2004 issue of Entrepreneur. Subscribe »

In the wake of the Google IPO in August, private business owners are once again daring to dream of taking their companies public. And yet, just as the IPO window may be opening, lawmakers and regulators are working to slam it shut by implementing tough new rules for public companies.

Recently enacted accounting and auditing standards, such as those mandated by the Sarbanes-Oxley Act, are so onerous that they're driving a new interest in so-called nonreporting public companies. These companies offer a comparatively simple process of going public through the purchase of a publicly traded company "shell."

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