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This is a commonly cited reason, but in reality, how many employees can be given pre-IPO stock before the company ends up with so many owners that they're forced to file for IPO?

Someone correct me if I'm wrong but I thought the number of owners that a privately-held company can have before being forced to go public is only 300.

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Employees would typically only be given options, not actual stock. I might be wrong, but I think they can give as many options as they want. And as anyone who has been granted options knows, options usually end up being worthless.

Facebook got an exemption from the SEC from that rule (it's 500 stockholders and $10 million in assets):

http://www.businessweek.com/technology/content/nov2008/tc200...

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