Case study

Forge Private Company Solutions

How DocuSign Used Employee Liquidity Programs to Stay Private for 15 Years and Support Talent Along the Way


Founded in 2003, DocuSign is a Silicon Valley success story: a company that spent years developing industry-leading technology to solve hard business challenges, with over one million customers using its products and thousands of employees contributing to its success.

Disruptive technology takes a long time to build, and DocuSign stayed private for 15 years in pursuit of its mission. During that time, thousands of employees contributed to DocuSign’s growth and success – which fostered a deeply engaged employee base and a large number of employees with vested equity.

Every employee’s financial needs are different – whether buying a house, paying for education, or caring for family. For DocuSign, this created a large number of individuals whose personal lives led them to seek liquidity for their vested equity as the company stayed private.

DocuSign understood the importance of supporting its employees in pursuit of their financial goals. To achieve this, from 2014 to 2018 DocuSign implemented a secondary liquidity program to help its employees turn their equity into cash as the company stayed private.

Here’s how they did it.

DocuSign understood the importance of supporting its employees in pursuit of their financial goals.

The challenge of managing employee liquidity

For years, DocuSign prohibited employees from selling their vested equity due to the operational challenges of managing this process, the uncertainty of what would happen if the company’s stock was sold in the private market, and the fact that each employee request was a burdensome one-off transaction.

These are common obstacles for many private companies. But as DocuSign grew its employee base while remaining private, employee demand for liquidity increased – and showed no signs of slowing down.

DocuSign’s leaders came to understand that this was not only a challenge that needed a solution, but that employee liquidity programs could serve as a core retention tool and compensation benefit for their talent.

For any private company, the growing number of employees with vested equity increases the demand for liquidity over time.

For illustrative purposes only.

The limits of a tender program

Private companies often dip their toes into employee liquidity by establishing a tender program, which has strict parameters on when employees can sell their stock and the price per share. Executives may also perceive tender programs as the easiest way to clean up a cap table – more on that later.

Tender programs have limitations for employees. By setting a strict price by which employees can sell their shares, employees can’t test the market. They are cut off from the massive pool of investors who may want to buy their stock and potentially bid higher prices than the last fundraising round.

To begin the process of providing employee liquidity, DocuSign arranged a tender program with a strict selling price for employees.

But they didn’t stop there. In a truly forward-looking approach, DocuSign simultaneously engaged Forge to tap its industry-leading network of institutional investors to purchase employee stock at market-based pricing.

DocuSign’s leadership understood the benefits of giving employees multiple options to sell their stock based on what’s best for their financial needs.

To manage any cap table concerns, Forge worked with DocuSign to funnel new investors into a special purpose vehicle (SPV). This convenient approach enabled DocuSign to keep the cap table clean while retaining line-of-sight into its investors.

By setting a strict price by which employees can sell their shares, employees can’t test the market.

Traditional Tender Program

Pre-approved investors

Forge Private Company Solutions

Broad universe of investors, cleanly structured via SPV

Market-based program yields better pricing for DocuSign employees

Employees participating in the tender program could sell their stock for $19.09, which was the same price as DocuSign’s Series F fundraising round.

Meanwhile, Forge tapped its investor network to generate buy-side demand for DocuSign stock and help set a market-based price for employees.

As investors became aware of the opportunity to purchase pre-IPO DocuSign stock, their bids increased – and employees were able to sell their stock for as much as a 15% premium to the Series F price, earning more money for their equity.

Forge’s market-based program offered employees better pricing than the tender offer, while maintaining the operational efficiency that satisfied DocuSign’s expectations.

Forge driven buy-side demand increased the share price by as much as 15%

For illustrative purposes only.

The impact on DocuSign’s employees

DocuSign had long been known as an innovator. Through this liquidity program, DocuSign disrupted the norm as they became one of the first private companies to understand how liquidity could improve the employee experience and drive long-term talent engagement and retention.

By establishing a market-based program, DocuSign broke new ground yet again by tapping into a broader investor base to purchase employee stock and enabling their employees to access more accurate pricing.

These transactions resulted in $78M in liquidity for DocuSign employee shareholders. Employees were very satisfied with the program, and DocuSign received positive feedback from their talent over the course of the program.

In seeking a preferred partner for market-based trading, DocuSign focused on finding an industry leader whose technology, expertise, and deep investor liquidity would create the best program for its employees and align with the company’s financing strategy. Executives sought a clearly structured program with fair, transparent pricing and wanted to maintain a clean cap table.

Large private companies also have to manage equity considerations from former and current employees. As DocuSign got started with liquidity, they initially allowed former employees to sell more stock than current employees. After hearing feedback from current employees and consulting with Forge, DocuSign changed this policy to be more favorable to current employees – a decision that was made in close partnership with Forge.

In April 2018, DocuSign went public and closed its first day of trading at an 85% premium to the last trade price on Forge.

Employees were very satisfied with the program, and DocuSign received positive feedback from their talent over the course of the program.

The Results

Successful market-based transactions
Total Transaction Value
Investors Participating in the SPV
And after 15 years as a private company, DocuSign went public

About Forge Private Company Solutions

Forge Global is a leading provider of marketplace infrastructure, data services, and technology solutions for private market participants. Forge Private Company Solutions works with high-growth private technology companies to structure employee liquidity programs, tap into the capital markets, and efficiently manage these operations through its proprietary program management and trading technology.

To learn how Forge Private Company Solutions can help facilitate a liquidity event for your organization, visit our website or contact [email protected] to set up a demo.