IPOs Are So Passé. Here’s How Employees Are Getting Rich Now.
For years, the biggest startup founders would dream of an initial public offering. It was the key to raising capital, drumming up attention and rewarding longtime employees and early investors with a big payout. Not any more.
These days, many founders happily avoid the costs, disclosure requirements, scrutiny and regulations of going public. The one hitch: Their employees still want to get rich. They’re finding the solution is the tender offer, an arrangement where shares are sold to a set of investors in a prearranged trade and employees and early investors can cash out some of their holdings.
Private companies have sold more than $6 billion worth of stock in tender offers so far this year, almost double the amount last year, according to Nasdaq Private Market, whose technology helps companies complete the transactions.
IPO data from Cordell Eminent Scholar Jay Ritter informs this story in the Wall Street Journal.
