Facebook May Have to Consider an IPO Following Mounting Pressure From the SEC

Following speculation earlier in the week of the possible enforcement of Facebook flotation by the SEC (the Securities and Exchange Commission), it appears that the possibility will become the inevitable sooner rather than later.

The conversation was initiated following the recent investment in the social media giant of approximately £320 million by Goldman Sachs. The deal has resulted in the current valuation of Facebook at some £32 billion, or $50 billion. The interest of the SEC was subsequently aroused, with the ensuing ruminations on the company's number of shareholders leading to a growing call for Facebook to take the company public.

Currently, the SEC specifies that a firm with more than 499 shareholders must make an initial public offering, however, in 2008 Facebook were granted an exemption from this ruling on the basis of the majority of its shareholders being internal employees.

No one is certain of the exact number of shareholders with an interest in the social networking company, although author of The Facebook Effect David Kirkpatrick has suggested that the firm had only 200 as of last summer. According to The Guardian website, it is thought that around 30% of stock is owned by staff, with the rest spread out amongst various other parties including Co-founder Dustin Moskovitz and U2 singer Bono (through his investment firm Elevation partners).

Now, with the SEC pressure mounting, Mark Zuckerberg may be forced to go public, despite previous convictions of being in no hurry to file for flotation. Never before has the prospect of having so many friends with so much wealth been the cause of such discontent for a 26 year old billionaire.

It appears that Facebook are beating off potential investors with a stick, with investment company Digital Sky Technologies working alongside Facebook to buy out shareholders in order to reduce the number of investors.

And with the potential for growth, this isn't surprising. It is believed that the purchase of 1.5% of Facebook by Elevation Partners, initially valued at $210 million, has earned the firm four times what they paid out.

Such a massive ROI, alongside the social impact and ever-increasing permeation of social media into every level of society (from the meteoric rise of teen sensation Justin Bieber to the humble abode of long running radio series The Archers and all the way to the top with tweets from US President Barack Obama), will make it extremely difficult for Zuckerberg to avoid the inevitable.