> The company is choosing the unusual method for going public because it doesn’t need the cash or publicity of an IPO, the person said at the time.
So why is it going public? Is there a benefit to a successful company?
So why is it going public? Is there a benefit to a successful company?
1. Investors and employees cash out
2. You have huge leverage with stock compensation that now is real cash
3. You can buy other companies because you have access to funding(sell company shares instead of taking a loan, etc)
I’m sure there are more benefits
Private equity specializes in leveraged buyouts of companies. The typical deal is that the private equity partners put their own money into a fund, that they then get others to invest in. This fund puts up a downpayment on a company with the bulk of the loan being taken out by the company, and then buys out the current owners. The private equity folks then try to "put lipstick on the pig" by making the company generate what looks to be good numbers, and then flip it to someone else. The profit is then shared with the fund as returns.
Sometimes the deal goes wrong and the private equity partners have to run the company for longer than expected.
Sometimes the deal goes very wrong, and the company goes out of business. Like happened to Toys "R" Us.
Even when the deal goes wrong, the private equity partners typically make their investment back between the fee for setting up the deal, and fees for running the company. This leaves the investors in their fund and the bank holding the bag as everything crashes and burns. But hey, that outcomes just proves how much smarter the private equity guys were than everyone else all along!
Compare and contrast to Warren Buffett's approach of buying whole companies cash, keeping current management in place, and running them for long term returns.
Doesn’t seem like they have any issues gaining liquidity.
Who do you propose employees sell their shares to?
Could be that a promise of IPO Real Soon Now factored into that exchange. But the original investors and the employees have to be thinking "we're not gonna get that much more successful than now. Where's my money?"
[0] https://www.atlassian.com/blog/announcements/new-atlassian-s...
Might not officially be an "investment" but it more or less amounts to the same thing.
https://www.atlassian.com/blog/announcements/new-atlassian-s...
In short:
* Need to go public if the company is too big
* More fair for employees stock holders
edit: Ah, missed the employees angle.
This is a good move by Slack to provide a return to the employees who have stuck with them.
Whilst markets exist for selling shares in private companies, it’s harder and there is a smaller pool of people looking to buy.
On the public market, any shareholder can sell their shares (relatively) easily, and since it’s a public market the pool of potential buyers is much bigger.
Employees don’t automatically get money for their shares, being public just makes it easier for them to if they decide they want to.