How liquidity can help unicorns tackle the Great Resignation
October 8, 2021

How liquidity can help unicorns tackle the Great Resignation

Forge Team

Tech workers across the country are quitting their jobs in droves, leaving companies to grapple with how they can better value and compensate employees to stave off ‘The Great Resignation.’ One avenue a growing number of private companies are exploring is liquidity-as-a-benefit -- a way to reward employees for their hard work and support their more immediate financial goals with minimal effect to the bottom line.

More Americans quit in April than any other month on record going back to the beginning of the century.1 Millions more continued to quit their jobs over the last several months – with the resignation rate in the US at a two-decade high, and 4 million quitting in July 2021 alone, according to the US Bureau of Labor Statistics. Mid-career workers and those in tech and healthcare jobs are quitting at the highest rates.2

The Great Resignation has even more complex implications when it comes to fast-growing private companies. Many of these companies want to stay private longer, but their employees are looking to cash in sooner than later on their equity – and they’re putting pressure on unicorn founders to appease their needs during this trying time.

What options do founders and exec teams have to keep their employees happy? How do they balance the need to retain top talent, while still maintaining control over their company’s destiny?

Private companies have an opportunity to offer employees a new kind of perk: the ability to cash out on some of their equity prior to an exit event. This can address two of the biggest gripes associated with the Great Resignation: not being appropriately compensated or feeling undervalued. This tactic benefits unicorn companies as well, who can appease shareholders and stay private longer if they desire. The result is a win-win.

How it works

Through Forge Company Solutions, unicorn companies can design and manage customized liquidity programs, which ultimately incentivize and reward employees and early investors, can serve as a mechanism for a company to raise capital, and can provide insight into market-based pricing for companies pursuing funding rounds or exits.

Companies that participate in Forge liquidity events maintain control of the offering, deciding how much equity employees can sell and when and, importantly, who is allowed to invest. Events are supported through Forge’s tech-enabled administrative functionality.

Depending on the type of program companies want to run, Forge can bring its marketplace to bear for the benefit of equity holders, who can access a diverse investor pool and auction-based pricing that has the potential to put more money in employees’ pockets than perhaps a traditional tender offer might. (In traditional tenders, companies often agree to a set, discounted price for all participating shares with one institution.)

Liquidity can be a win-win

Company-sponsored liquidity can become an exciting event for employees. It can help motivate and retain existing employees, and is an attractive benefit for prospective employees who won’t have to wait for an exit event to realize the fruits of their hard work and commitment to a company. It helps current employees achieve financial goals and needs in their personal lives -- buying a home or paying for college for their children, for instance. And now, advances in technology and the maturation of Forge’s Company Solutions are making liquidity programs even more attractive for companies and founders.

Many companies have already found success leveraging the private markets in this way, including Palantir, Spotify and Slack. A private company for 18 years, employees, executives and investors in Palantir, for example, sold hundreds of millions in equity prior to the company’s 2020 IPO. The benefits of that private market access meant the company could stay private until it was ready for the public markets. Investors got early access to the company before it was public. The company got market-based insight on its reference price. And employees got early liquidity as a reward for their contribution to the company’s success.

Visit Forge Company Solutions to learn more about customized liquidity programs.

1 The Atlantic
2 Business Insider

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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.

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.

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