NASDAQ has agreed to buy SecondMarket Solutions to combine forces with the NASDAQ Private Market. The group will facilitate the exchange of shares for private companies, including DocuSign, Pinterest, Shazam and Tango.
Bill Siegel, present CEO of SecondMarket, will lead the expanded NASDAQ Private Market business, which will be headquartered in both San Francisco and New York. The businesses will continue to operate as usual from day one.
The terms of the deal were not disclosed.
As startups stay private longer, there is an increased need to provide liquidity for shareholders. Nelson Griggs, executive vice president at NASDAQ, said that giving the employees the option to sell shares helps startups “attract and retain the best talent.”
It creates less pressure on the companies to complete an IPO or sale if insiders have access to cash. While the share value generally goes up at the time of the IPO, employees may have an interest in selling some shares beforehand, to buy a home or make other large purchases.
There is also demand for shares of these fast-growing companies. The NASDAQ Private Market will be working with institutional investors to help them gain access to these pre-IPO startups.
SecondMarket was founded in 2004 and has gone through several iterations of its business. An early pioneer in the private secondary market, the company developed a platform for trading shares of Facebook and other in-demand startups.
After Facebook went public, SecondMarket changed its focus in 2013 from one-off trades to company-sponsored transactions. The group facilitated over 70 company-sponsored tender offer programs and processed over $2.5 billion in transaction volume.
SecondMarket has raised over $34 million in funding from FirstMark Capital, Li Ka-shing, Social Capital and Temasek Holdings.
Previously, the NASDAQ Private Market was a joint venture with SharesPost. The NASDAQ now holds full ownership of the NASDAQ Private Market.