This article originally appeared on April 10, 2019 by The Wall Street Journal.
Uber Technologies Inc. is moving closer to an IPO, but due to its global reach and diverse operations, it faced a greater regulatory burden that put it on a more circuitous route to public markets than smaller rival Lyft Inc.
Uber’s journey—it is expected to make its IPO filing public as soon as Thursday—highlights the challenges of placing a value on a wide-ranging grouping of businesses.
It also illuminates the task Uber executives have yet to tackle: communicating the story of its varied businesses to experienced fund managers and mom-and-pop investors who are considering buying stock in the company.
Investors and regulators are likely to see similar issues play out as the most valuable private companies eventually migrate to Wall Street.
Take WeWork Cos., which was valued at $47 billion by private investors. The venture-backed shared-office giant also has a global footprint, has widely varied investments and has acquired several digital platforms as it broadens its offerings to business customers.
Uber operates in 63 countries compared with Lyft’s two, and it has a wider range of operations beyond ride-hailing, including a freight division and a unit developing autonomous vehicles.
Uber and Lyft both submitted their confidential IPO filings at the same time in December, according to a person familiar with the matter. But Lyft’s simpler business enabled it to fast track its process, and it went public at the end of March.
Uber’s plans to unveil its IPO filing as soon as this Thursday would put it on track to begin its roadshow later this month and for a stock market debut in mid-May, a typical IPO timeline.
Representatives for Uber, Lyft and WeWork declined to comment for this article.
Uber’s global reach, extended last month by a $3.1 billion acquisition of Middle Eastern rival Careem Networks FZ, has contributed to a more cumbersome regulatory approval process for its IPO, according to advisers who help companies prepare to go public. Uber also owns part of Didi Chuxing, the Chinese ride-sharing business, and Southeast Asia’s Grab and has a joint venture with Russia’s Yandex.
In going public, it all comes down to whether a company’s “investments are material enough to require financial disclosures. If they have to be audited and they haven’t previously been audited, that’s where things get really hairy,” said Barrett Daniels, a partner at Deloitte & Touche LLP who helps companies prepare for IPOs.
“You never know what the SEC is going to ask for,” Mr. Daniels said. “The more questions, simply, the more time it takes to respond to get through the IPO process.”
The SEC typically questions management about how a company presents financial results in its prospectus. The results of joint ventures, for example, could be highlighted separately or consolidated in a company’s overall financials, consultants said.
Regulators also likely scrutinized how Uber approaches segment reporting—often a sticky issue for companies with a mix of business lines and global reach. Uber’s ride-hailing business spans cars, bikes, scooters, boats and aircraft. The company’s food-delivery unit, Uber Eats, accounts for a growing portion of its revenue, according to a person familiar with the matter.
The SEC will be looking to ensure that Uber gives investors the same level of nuance and specificity on business segments that managers use to allocate resources, said Chris Clapp, managing director at MorganFranklin Consulting LLC.
“Companies have a bias often times to have it be more consolidated because they don’t want to have to answer questions at a very detailed level about their financial performance,” he said. “It’s a fine line that companies have to walk to determine what’s the right level of detail.”
Lyft’s more streamlined and simpler business likely aided the company in expediently passing regulators’ reviews and entering public markets, advisers not involved in the company’s IPO said.
Uber’s larger business footprint also could mean it faces a wider range of risks, inviting more back and forth with regulators, advisers said. The SEC requires companies to disclose all their market risk factors so investors can make an informed decision when deciding whether to buy the stock.
“Every section of the registration statement just gets more and more complicated because the business as a whole is more complicated and the SEC just has more areas to home in on and ask more questions about,” Mr. Clapp said.
Yet for all of Uber’s complexities, the company still appears on pace to go from filing to public debut in less than six months.