KU research shows JOBS Act backfired, resulting in acquisitions of companies instead of increasing IPOs

LAWRENCE — More than a decade ago, Congress passed major bipartisan reforms to revive the struggling IPO market. New research from the University of Kansas reveals that those measures backfired, pushing startups away from IPOs and toward acquisitions.

Signed by President Obama, the JOBS Act of 2012 made it easier for companies to begin the IPO process by allowing them to “test the waters” with prospective investors and to file their initial disclosures confidentially.  But, as Alex Platt documents in a new paper, the changes actually encouraged startups to leverage the IPO process to enhance non-IPO exits.

“Almost immediately after the JOBS Act, you start to see more and more big law firms get very excited about so-called ‘dual-track’ exits,” said Platt, professor of law. “Instead of choosing between an IPO and acquisition at the outset, startups could now easily pursue both options at once, solicit bids, gather information and ultimately select the best deal.”

Platt’s article “Dual-Track Bias,” forthcoming in the Washington University Law Review, identifies features baked into the dual-track process that systematically favor acquisitions over IPOs. For instance, while securities law allows potential acquirers to learn what’s going on in the IPO process, it prevents IPO investors from learning anything about the acquisition process.

“Dual-tracking works like an auction with half the bidders behind a one-way mirror,” Platt said. “Bidders with full visibility have a huge advantage: They will either win outright or walk away knowing others are overpaying. That’s the advantage acquirers have over IPO bidders in a dual-track process.”

Platt also highlights how investment banks may earn higher fees and face lower risks from acquisitions as compared IPOs, creating incentives for them to steer their dual-tracking clients toward sales.

“The rise of dual-tracking and the pro-acquisition biases built into that process help explain why acquisition prices have gone up under the JOBS Act while IPO prices have gone down,” Platt said, noting that this is exactly the opposite of what Congress would have hoped for.

The paper was recently selected for presentation at the 2026 Harvard/Stanford/Yale Junior Faculty Forum. Platt’s findings come just as the U.S. Senate prepares to take up the INVEST Act, passed by the House in December 2025, which would further expand the same JOBS Act IPO process reforms that kicked off the dual-tracking trend in the first place.

“Revitalizing the IPO market is a worthy goal,” Platt said. “But doubling down on the same reforms that have inadvertently weakened IPOs in the first place isn’t going to work. A different approach is needed.”