Uber and Lyft’s long-awaited IPOs could crash into government-shutdown wall

The U.S. government shutdown, now in its 21st day, is disrupting the initial-public-offering process and may cause delays in some of the bigger deals expected in 2019, including those of ride-sharing services Uber and Lyft.

While January and February are typically slow months for new offerings as companies need to complete calendar-year audits, the shutdown “is beginning to gum up the IPO process,” said Kathleen Smith, principal at Renaissance Capital, a manager of IPO exchange-traded funds.

That is because, during the shutdown, the Securities and Exchange Commission is unable to provide feedback and approval on filings that issuers need to move their registration statements forward ahead of launch, she said.

“We think that it probably didn’t matter much during the holidays, but as the government shutdown continues into 2019, a backlog is building that will delay the IPO process for companies of all sizes, including the large tech deals such as Uber, Lyft, Slack, Pinterest, etc., that are on file confidentially,” said Smith.

Read also: The shutdown’s real lesson: Government has taken hostage too much of the economy

Timothy Kviz, national assurance managing partner for SEC services at BDO, agreed.

“Until the government reopens and the SEC resumes work, there won’t be any deals,” he said. “They will need to clear the backlog and then start processing.”

If the shutdown were to continue for a prolonged period, companies could end up with financial statements that have “gone stale,” said Kviz. That means they have reached a point where the quarterly financials included have become so old that the issuer needs to provide numbers for the subsequent quarter. Those numbers need to be audited to be included in a prospectus, creating another potential holdup.

Still, Renaissance Capital’s Smith said the forced delay may help some companies, given weakness in the stock

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