Start-Ups Slam Into Sarbanes

But anecdotal evidence suggests that the perception of the onerous costs involved with new compliance laws is taking its toll. "People just don't want to talk about an IPO anymore," says Vector Capital's Slusky. "They want to sell."

Vector has been another of the unintentional beneficiaries of Sarbanes-Oxley. The buyout firm has found some companies willing to go private rather than bear the costs of compliance and auditing.

"We took Register.com private partly because of the extraordinary burden of Sarbanes-Oxley. It was going to spend nearly one-third of its net revenue on Sarbanes-Oxley and other public-company costs," Slusky says. "This law has been very good for our business."

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This is the first part of a three-part feature on Sarbanes-Oxley and its effects. Other stories will focus on the impact on investors and efforts to modify the law.