As reported in the April 29th edition of Compliance Week, the law firm of Foley Lardner recently published a study that claimed companies can expect the cost of being public to increase by nearly 100 percent.

The cause: more rigorous governance compliance, legal fees, D&O insurance, and disclosure requirements, and other costs associated with the post-SOX environment.

As a result, wide-spread media reports of companies "going private" have proliferated;

Mergerstat reported that going-private transactions reached an all-time high last year, and CFO Magazine recently published a story claiming that "stricter rules and wary investors are prompting more companies to exit the public markets."

We decided to scour recent filings to see what types of companies have decided to pursue a "going private" transaction, and to understand how the regulatory climate has effected that decision as articulated in disclosures.

In most cases, while SOX may have been mentioned as a key reason for going public, it was never listed as the primary reason, and in many cases was cited last among a long list that included maintenance costs of small shareholders, a limited market for their stock, advice from counsel and independent directors, the economic environment, and numerous other factors.

As usual, we've included links to the actual filings with appropriate page numbers so you can review these and other details details. Research was conducted with the assistance of 10kwizard.com.

Company

Date, Filing

"Going Private" Discussion

Filing

Media Source

SC 13E3, 5/27/03

"Particularly in light of the Sarbanes-Oxley Act of 2002 ... Media Source expects that, if it is to continue as a public company, its costs to maintain itself as such will increase significantly. Recent changes required by the Sarbanes-Oxley Act of 2002 (a) have increased and will continue to increase the burdens on management with respect to public company compliance, (b) have increased the CEO’s and the CFO’s potential contingent liabilities for securities law compliance problems, and (c) will require that Media Source, if it continues as a public company, alter the composition of its board and its audit committee in ways that would not be required of a private company."

Download Filing (See Page 18)

Professional Staff

SC 13E3/A3, 5/23/03

"As trading in the ADSs continued to decline and conditions remained difficult (particularly in the telecommunications sector), the Board concluded that shareholder value would not be best served by maintaining the current quoted status of Professional Staff (particularly in view of the costs associated with maintaining a Nasdaq quotation, estimated by Professional Staff to be approximately $500,000 per year) and that difficulties in the staffing sector as a whole made an asset sale or merger an unattractive option at prevailing values. The costs of maintaining a Nasdaq quotation include increased legal costs; increased audit costs; the costs of complying with the Sarbanes-Oxley Act of 2002; the costs of maintaining investor relations; increased travel costs; extra costs associated with holding Annual and Extraordinary General Meetings; the costs of employing a more experienced company secretary and financial controller; Nasdaq listing fees; costs associated with filing Forms 20-F and 6-K; and depository bank fees for American Depositary Shares."

Download Filing (See Page 18)

InvestorsBancorp

SC 13E3, 5/21/03

"In addition to the burden on management, the costs associated with

these reports and other filing obligations comprise a significant corporate

overhead expense. These costs include securities counsel fees, auditor fees,

costs of printing and mailing the shareholder documents, and word processing,

specialized software and filing costs. These registration and reporting related

costs have been increasing over the years, and we believe they will continue to

increase, particularly as a result of the additional reporting and disclosure

obligations imposed on public companies by the recently enacted Sarbanes-Oxley

Act of 2002."

Download Filing (See Page 9)

AHL Services

SC 13E3/A, 5/13/03

"Specifically, the most significant factors that the special committee evaluated in connection with these considerations and believed supported its determination include ... The compliance, insurance, regulatory and other costs of being a public company listed on the Nasdaq Smallcap Market, including the additional costs associated with complying with the recently enacted Sarbanes-Oxley Act and the rules being proposed and implemented by Nasdaq."

Download Filing (See Page 30)

Henderson Citizens

SC 13E3, 5/8/03

"The costs associated with these [SEC] reports and other filing obligations comprise a significant overhead expense. These costs include professional fees for our auditors and corporate counsel, printing and mailing costs, internal compliance costs and transfer agent costs. These SEC registration related costs have been increasing over the years, and we believe they that they will continue to increase, particularly as a result of the additional reporting and disclosure obligations imposed on public companies by the recently enacted Sarbanes-Oxley Act of 2002.

"Accordingly, the board of directors determined that the recurring expense and burden of maintaining so many small shareholder accounts, coupled with the costs associated with complying with the reporting requirements of Section 15(d) of the Securities Exchange Act, is not cost efficient for Henderson Citizens."

Download Filing (See Page 13)

Inland Resources

SC 13E3/A, 4/21/03

"As a result of recent corporate governance scandals and the legislative and litigation environment resulting from those scandals, the costs of being a public company in general, and the costs of remaining a public company in particular, are expected to increase dramatically in the near future. For example, directors and officers insurance premiums on the Company’s policy have increased and may increase again upon renewal of the policy in November 2003. Moreover, new legislation, such as the recently enacted Sarbanes-Oxley Act of 2002, will have the effect of increasing the burdens and potential liabilities of being a public reporting company. This and other proposed legislation will likely increase audit fees, legal fees and other costs of compliance, and by increasing the potential liability of officers and directors, will likely result in further increases in insurance premiums and difficulty in attracting qualified independent persons to serve on the Board. In light of the Company’s current size and resources, the Board does not believe that such costs are justified. Therefore, the Board believes that it is in the Company’s best interests to eliminate the administrative and financial burden associated with being and remaining a public company. The direct and indirect expenses incurred in being publicly traded are one of the most significant expenses that can be eliminated without negatively affecting operations."

Download Filing (See Page 7)

South Banking Company

SC 13E3/A, 4/24/03

"Going private" will relieve the company from the expense and burden

associated with compliance with both current and proposed federal securities

laws and regulations. These burdens include not only filing publicly available

periodic reports with the Securities and Exchange Commission, or SEC, but also

new obligations under the Sarbanes-Oxley Act of 2002. We anticipate that the new

obligations under this act will greatly increase administrative costs. In light

of the absence of a public trading market for the common stock and other

factors, in the opinion of management such additional costs are not justified."

Download Filing (See Page 3)

Aviva Petroleum

SC 13E3, 4/14/03

"...The directors concluded that none of those prospects was likely and thus focused on other alternatives, including the possibility of a “going private” transaction. During those discussions, the directors discussed the Company’s alternatives to going private, primarily liquidation and bankruptcy, and determined that neither of these options would be in the best interest of the shareholders of the Company. In this regard, see “—Fairness of the Share Consolidation.” Management expressed its view that neither the Company nor its shareholders derive significant benefit from our being a public company. We would incur considerable cost to maintain our status as a public company and, as discussed above, we may be unable to comply fully with the recently enacted Sarbanes-Oxley Act. Our directors considered the advantages and disadvantages of being a public company and directed management to conduct a cost and feasibility study of going private."

Download Filing (See Page 9)

QXL

SC 13E3/A, 3/19/03

"The actual cost savings of no longer being a U.S. reporting company are

expected to be much greater than simply eliminating the estimated historical

costs. As a result of recent corporate governance scandals and the legislative

and litigation environment resulting from those scandals, the costs of being a

U.S. reporting company in general, and the costs of the Company remaining a U.S.

reporting company in particular, are expected to increase dramatically in the

near future. For example, our directors' and officers' liability insurance

broker has informed us that premiums are likely to increase by approximately 40%

upon the next renewal of our policy in April 2003. Moreover, new legislation,

such as the recently enacted Sarbanes-Oxley Act of 2002, will have the effect of

increasing the burdens and potential liabilities of being a public reporting

company. This and other proposed legislation will likely increase audit fees and

other costs of compliance such as SEC counsel fees and, by increasing potential

liability of officers and directors, likely result in further increases in

insurance premiums."

Download Filing (See Page 5)