An Introduction to Secondary Auctions for Private Companies

Published

January 22, 2019

Secondary transactions in the venture capital (VC)-backed, private company space have increased over the past several years. For these secondary transactions, the tender offer has been the dominant transaction because of its predictability and structure. However, a new transaction structure, private company auctions, is gaining interest from companies and shareholders. These auctions may be able to provide more competitive pricing and potentially allow the company shareholders to be more involved in the transaction itself.

In 2018, Nasdaq Private Market (NPM) began exploring its capabilities in private secondary transactions to include several different types of auctions. We believe that these new program structures may have the potential to benefit the sponsor company, shareholders, and the buyers, and could change how private companies hold secondary transactions.

In this paper, you will read about:

  • Introduction and overview of Private Company Auctions
  • Advantages and disadvantages of Auction-based transactions
  • Case study featuring an NPM client using this transaction model
  • Considerations for running an Auction

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Our Solutions

We are a market leader in facilitating private company liquidity. Since 2013, we have facilitated liquidity programs on behalf of 120+ private companies.

Key Offerings

  • Tender Offers/Buybacks

  • Secondary Captial Introductions

  • Auctions

Through organized auctions, fund managers can provide liquidity to current investors while broadening access to new investors.

Key Offerings

  • Limited partner Interests

  • '40 Act Registered Funds

  • Auction Funds