I have some shares from a company I used to work for; they're very successful in their space - huge growth/market capture in just a few years in a hot sector, etc. The only problem - at least from my perspective - is that every time they get ready to do an IPO, major venture firms throw BIG chunks of cash at them, so those plans get shelved for another year. Great in that it brings the total cap/share value up, annoying in that I can't sell my shares in the open market (yeah, I know about pre-IPO stock buyers... checked it out, not a fan.) My big question is this: I just got a message from them about a 3:1 stock split. Yeah, I understand how all that works... I just don't know what it implies about IPO plans, or their financial perspective, or really anything. And I know that some of you folks spend your days reading Form 4/10b5-1 disclosures and all that other... stuff that I find nearly impenetrable. So, any thoughts you have on what it means or implies would be appreciated.
It means they could get ready to take over another company or they want to lower the price of the stock for an IPOnor it is just a tax trick. Your's to decide as long as we don't know more details. Kind regards
What sort of details would you need? These folks have more than enough cash - in fact, they've been cash-flow positive since their startup days - and as I recall, they have bought a couple of smaller companies that they've folded into their product. Again, I'm rather clue-deficient when it comes to this side of corporate ops despite having taken a number of classes - but it smelled like a possible "getting ready to IPO" move to me. I discounted that as possible/likely bias, because that's what I'm hoping it means... which is really why I'm looking for an opinion from folks who are more informed but don't have a dog in the fight. I can provide the name of the company, if that would be of help.
Why is it important to you that they go public? Are you guessing this will add value to the company? If selling your shares is what you are interested in then start looking for a buyer. Going public just adds more uncertainty and volatility.
IPO = liquidity. Right now, I have to find a specialist vs. just clicking the mouse. I've looked - at least, at a few of the ones easily found on the net. Frankly, the arrogant "give us all of your paperwork, then we'll think of making you an offer" attitude I've seen so far is a complete turn-off for me. If someone was willing to talk numbers and make an offer near my range, we could at least talk... but I can't take anyone who comes off with that kind of nonsense seriously. If I knew where to look for professionals who deal in pre-IPO stocks, I'd definitely be interested.
Get contact info for recent investors. Call them. "I have some shares. Want a few more? Maybe someone in your office does? I can offer a slight discount to the price you just paid". I've done this before with private shares. It can work. If they don't know someone then one of the many young and energetic people that work at those firms might be interested in your shares.
Well, here's a question for you (Keep in mind I have never invested and held shares in a private company that had plans to go public.) Why did you invest in the company in the first place? You obviously believed in them enough when you worked for them to buy a stake... So why not just hold onto their shares until they go public. The fact that they keep getting more capital from the outside means more and more people are believing in them. Your shares get diluted each time they go through another round of fundraising for equity stakes, (which may be why they are splitting), but isn't that a good sign?
Well, I "invested" in them via an employment contract that included stock grants - more of a reflexive "negotiate the package" sort of thing rather than an informed investment strategy. I mean, I knew they were a big-time up and comer - they fit my rather narrow selection criteria (I'm actually somewhat uneasy as an employee - to me, there's an inherent conflict of interest in that relationship - so I usually contract my services instead. They were the rare exception.) So, it wasn't the product of me being a brilliant investor - it just turned out that these guys kicked major ass. But that's the Silicon Valley bet for ya... I just happened to be on the winning side of it this time. As to holding the shares vs. selling them - that's a different sort of bet. Do I think they could continue to kick ass? Possibly. Could they blow up and disappear tomorrow? Unlikely... but the utility of the cash that selling out would bring me, and having the choice of being all in on this one company's future vs. diversifying as I see fit would be in my hands. And that is something I see as highly valuable. I'll admit that reasoning may be a bit abstract for some, but it makes sense to me.