Nasdaq Private Market on Pace for Record Fourth Quarter, Anticipates Strong Pipeline for 2021
Nasdaq Private Market anticipates its strongest fourth quarter on record, driven by a surge in private company-sponsored liquidity programs, as the capital markets rebounded strongly in the second half of the year after the initial disruptions caused by the coronavirus pandemic.
NPM currently has a pipeline of more than 45 private company-sponsored liquidity programs in the fourth quarter, representing a 70% increase compared to the same period a year ago, and is expected to outpace last year’s annual total of 87 transactions.
“We have experienced incredible demand from private companies for liquidity coming out of the initial Q2 slowdowns from the pandemic, especially through the second half of the year,” said Eric Folkemer, Head of Nasdaq Private Market. “There continues to be tremendous momentum in the private market, which has boosted company and investor optimism and participation in the strong pipeline of IPOs we’ve seen year-to-date. We are very bullish on the remainder of the year, and we believe that will continue into 2021.”
Late-Stage Companies Leveraging NPM’s Buy-side Auctions and Continuous Market Offerings Prior to Listing
As private market activity regained momentum during the second half of 2020, NPM has seen a growing trend of late-stage companies, particularly those looking to tap the public markets within a year or two, utilizing NPM’s buy-side auction technology as part of their controlled liquidity program. This shift underscores that private companies are recognizing the benefits of a mechanism to aggregate broader investor interest to maximize shareholder value through a competitive price discovery process. This process can also help companies expand and diversify their institutional investor base.
Furthermore, the rise of direct listings could have an effect on the private markets. As more companies consider a direct listing instead of a traditional IPO, companies are considering waiving transfer restrictions to enable an active secondary market and develop multiple benchmarks for potential use by advisors and the exchange in establishing the reference price on the day of public listing. Companies are working with Nasdaq Private Market to ensure a centralized secondary market for eligible stakeholders and employees. Through NPM’s Continuous Market platform, operational complexities are streamlined, and sell-side and buy-side interest is centralized through a transparent order book process for the company and eligible participants controlled by the company.
The Future of the Private Secondary Market
While the pandemic may have slowed the private market activity earlier this year, momentum rebounded, and strong market activity is anticipated into 2021. NPM is actively building up its transaction pipeline, which already consists of several dozen liquidity offerings slated for next year.
As private companies continue to stay private, NPM enables new possibilities through its technology and experience in operating secondary markets across the entire lifecycle from early growth to public companies. NPM believes the private secondary market will only continue to develop, providing more opportunities for private companies to access liquidity while continuing to drive growth outside of the public market.
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