Klaviyo’s Tender Offer Gets Personal

For Klaviyo employees, the recent tender offer facilitated by Nasdaq Private Market offered an opportunity for them to exercise their stock options in the software company and potentially use it for personal benefits, such as a new home or as a means to pay off student debt.

Klaviyo, a Boston-based technology company is the world’s leading owned marketing platform known for accelerating revenue for online businesses using the channels they own, like email, web and mobile. The company worked with Nasdaq Private Market on a tender offer as a means to offer employees a path to liquidity as well as a tool to attract and retain talent. Tender offers provide companies a way to relieve internal liquidity pressures, gain access to new investors and establish a competitive advantage in retaining and recruiting talent.

“It was important for us to be able to give back to our employees,” said Klaviyo Chief Revenue Officer Steve Wietrecki. “We’re on a path to growth a substantial business — at least we hope we are — and in the meantime, it’s great, as everyday activities throw curves at folks, to be able to give people a chance to realize something for the value that they have created, and not have to wait for an IPO.”

“We are extremely excited to have Klaviyo join our community of innovative private companies,” said Eric Folkemer, Head of Nasdaq Private Market. “We pride ourselves on supporting original companies like Klaviyo to help them deliver value to their hard working employees through periodic secondary liquidity programs on our platform.”

Most Klaviyo employees, including Senior Project Manager Sean Walsh, heard about the tender offer at a company-wide meeting, in which executives outlined how to take advantage of the stock options that employees had. Walsh, who has been a Klaviyo employee for about two years, noted that he got unvested stock options for signing.

“At first, I wasn’t going to participate, and then I started to think about what I could do with those funds,” said Walsh. “I calculated how much money I need to buy the other options that I’ve vested over the course of this year and then also pay the alternative minimum tax, which is a very tricky tax law to figure out.”

“Ultimately, my wife said, ‘You can do whatever you want as long as it is roughly net neutral in terms of the financial impact on our family,’” Walsh continued.

For Colleen Farrell, lead of the customer success team at Klaviyo, she knew exactly how to put the tender funds to use.

“I decided to participate because something that I knew I really wanted to pay off was my student loans, and this afforded me the opportunity to do that with a little extra wiggle room for personal expenses — I also bought a Klaviyo-colored green Vespa,” said Farrell. “I’m incredibly grateful because I thought it would take me about another decade-and-a-half to pay my student loans, and the tender allowed me to do that.”

Meanwhile, Jake Cohen, a father of two young children and Klaviyo’s 25th employee, used the tender offer as a means to buy a bigger home for his growing family.

“We had a longer-term plan to try and move into a home that was more accommodating to our family, and the tender offer provided us an opportunity to accelerate that so we can be more comfortable at home,” Cohen said.

While Cohen decided to exercise his options, it was a decision he did not take lightly.

“I actually never, ever want to sell any shares of Klaviyo because I’m so bullish on what we’re doing and the future of it,” he said, emphasizing how rare it is to work for a company that “thinks hard and acts harder” on what will help their employees.

“For me, the fact that Klaviyo chose to create a scenario where they could provide employees the opportunity to create some liquidity is a testament to their employee-first long-term thinking around making sure that people have what they need to be productive and happy participants in the growth of the company,” Cohen continued.

As part Klaviyo’s tender offer, the software company utilized NPM’s platform and designated account managers to assist employees through the tender submission and e-signature process, which allowed Klaviyo to also monitor the offering status via a live dashboard and view reports on transaction milestones.

“It was great not having to worry about the back-end and to be able to really focus on making sure the employees understood what they could get from the tender, rather than all the mechanisms and back-end,” said Wietrecki. “Having Nasdaq take care of all of that and make it a seamless experience was fantastic.”

“As a tech guy who thinks about the design of things, I was looking at the design of the [NPM] tool, and it was nice how simple it was and did some of the math for me,” said Walsh. “I felt supported throughout this process.”

NPM has experienced robust growth over the past several years. In 2019, NPM facilitated 48 third-party tender offers, building upon the 46 tender offers the prior year. Since its inception, NPM has conducted 350 programs for private companies, facilitating at least $24 billion in private transaction value.

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