Forge company solutions: control your company’s destiny
Private companies are turning to liquidity events and capital-raising programs to appease shareholders the longer they stay private (and they are staying private longer). To seamlessly execute a liquidity event and/or raise capital before a public offering, issuers need the right technology and a more modern marketplace that can provide both greater control and transparency.
Shifting power: How unicorn founders keep control
There is an increasing tension between fast-growing companies that want to stay private and their employees who are looking to cash in sooner than later on their equity, and it’s putting intense pressure on founders. While staying private longer can foster creative thinking and innovation, it can also result in frustrated shareholders such as employees who were expecting to cash in sooner than later on the stock that was included in their compensation packages. This can lead to a myriad of issues – from hurdles raising capital and retaining talent, to employees and other shareholders pressuring companies to go public when the timing isn’t right or before they’re ready.
Airbnb employees, for example, grew impatient for a payout and put pressure on the company to go public so they could sell their stock options. This tension led to eager investment firms and brokers seeking out former employees to offer cash loans for their stock once the company went public. More recently, after the Visa and Plaid deal fell through, former Plaid employees were being targeted by private buyers interested in buying their shares at 4x the price Visa would have paid.
Private companies want to – need to – avoid this kind of tension as they lead up to their public offering, but many don’t feel like they have options and/or are aware that it’s possible to maintain control of their debut while also providing options for employees to cash in beforehand.
Take in the reins with a modern marketplace
With Forge Company Solutions, issuers can facilitate custom liquidity programs, including executive liquidity, company-sponsored employee liquidity with cashless exercise option, and direct listings, that ultimately incentivize and support employees and investors, raise capital, and provide insight into market-based pricing. The platform does this all while also ensuring control over an organization’s cap table and providing a seamless administrative experience. Sounds too good to be true? Many companies have already found success leveraging the private markets in this way.
Palantir, for example, may have been able to stay private so long in part because venture and private equity investors who got in in earlier rounds of Palantir stock traded large stakes through the private markets to other investment groups, demonstrating how some VCs are leveraging the private markets to get liquidity prior to public listing. With this, the company’s debut was a major moment for the private markets, given the trading of the tech giant’s shares were an early indication of market-based pricing insights that could be gleaned from a modern marketplace like Forge.
Squarespace, which recently filed to go public, made headlines for their $200 million secondary round that General Atlantic financed in 2017 (a secondary round is a transaction in which an external party buys shares from existing shareholders instead of the company issuing new equity). With a marketplace like Forge, companies can either bring in one large financier (like Squarespace did with General Atlantic) or pull together multiple buyers for the secondary offer. Whichever route, all the administrative details of the offering are managed easily through the Forge platform, making it easy for shareholders to participate.
Forge Company Solutions gives unicorn companies greater control in timing their public debuts (and the events that lead up to the debut), helping them control their own destinies. Learn more about the comprehensive platform for custom solutions that enable growth and innovation – request a demo today.
PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES
The information and material presented in this article is provided for your informational purposes only and does not constitute an offer by Forge Global, Inc., Forge Securities LLC or any of its affiliates (collectively, "Forge") to sell, or a solicitation of an offer to buy any securities and may not be used or relied upon in connection with any offer or sale of securities. An offer or solicitation can be made only through the delivery of final offering document(s) and purchase agreement and will be subject to the terms and conditions and risks delivered in such documents.
This article does not constitute an offer to provide investment advice or service. Registered representatives of Forge Securities LLC do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services. Securities referenced in this article may be offered by Forge Securities LLC, member FINRA/SIPC.
Forge Securities LLC is a wholly owned subsidiary of Forge Global, Inc. Certain affiliates may act as principals in such transactions. Forge Data LLC is an affiliate of Forge Global, Inc. and Forge Securities LLC.
Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice. Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.