August 3, 2021
Private Co’s: Secondary Markets Could Make Employee Equity More Valuable
I’ve blogged before about resale restrictions on equity awards to private company employees – but it’s been a few years. Trading in pre-IPO shares has taken off since then – and Nasdaq just announced that it’s spinning off its private company trading platform in a deal with several big banks. If you’re working with private companies, it’s worth considering whether this affects the value or terms of employee awards. This WSJ article gives some info on who’s using the service:
Nasdaq says its private-market platform is already the leading venue for private-company tender offers. In such transactions, the holders of private-company shares are allowed to sell them within a specified window of time, usually to a large investor or to the company itself.
Cryptocurrency exchange operator Coinbase Global Inc. and cloud-software provider Asana Inc. are among the companies that used Nasdaq Private Market before their IPOs.
In the first six months of 2021, Nasdaq Private Market facilitated a record 57 private-company secondary transactions, according to the exchange operator. The platform handled $4.6 billion in total transaction value in the period, the highest level in three years, Nasdaq said.
– Liz Dunshee