With SecondMarket acquisition, Nasdaq moves closer to liquidifying private shares market

Public markets cooling, hot private markets
[x_pullquote type="right"]In 2014, there were 211 $40M+ growth rounds - just about one per day. In contrast, there were 15 US IT venture-backed IPOs with offerings greater than $40M last year, slightly more one IPO per month in 2014.[/x_pullquote]This acquisition comes amid a tepid market for tech IPOs. Public tech listings have fallen this year to the lowest point they've been in 6 years. Indeed, private companies are raising massive amounts of capital from private sources. Tomasz Tunguz, a venture capitalist, did the math on public/private markets disparity and it's staggering. There are a variety of factors behind the drop in successful tech companies deciding to publicly float their shares. Jeremy Kopelman of First Round Capital calls this the "private IPO phenomenon". According to the venture capitalist:In my opinion, there isn’t nearly enough focus on “low frequency trading.” Public companies reprice daily. Private companies don’t have to reprice for years on end.
One key benefit of low-frequency trading in private companies is a long-term focus. It removes arbitrary time constraints on growth and profits. By relying on private financing events as “comps,” we risk pricing new financings (and creating new unicorns) based on stale valuations.
With public transactions cooling, Nasdaq has made it clear the exchange is looking for more growthy markets. Nasdaq established a partnership with SecondMarket's larger competitor, SharesPost, in 2013. The partnership, called Nasdaq Private Market, never really found a lot of traction and Nasdaq reported it would be buying out SharesPost's stake in the venture.
With the run-up in funding rounds and valuations on the private market, many companies are turning to tender offers to allow employees to take some cash off the table in a controlled manner, set and managed by the company. "As companies extend their pre-IPO lives, they face increasing pressure to provide liquidity to employees and early investors," said Bill Siegel, CEO of SecondMarket. "Our combined offering strives to give private companies a comprehensive, company-controlled solution to attract and retain talent, while also providing tools to effectively manage their equity ownership and secondary liquidity for their employees and shareholders."