Fast-growing companies are known for enticing new talent by offering an equity stake in their businesses. Employees look forward to their equity being paid out in cash when the company floats or is acquired by a private equity firm or competitor.
This gives them a potentially greater return, ownership of the company, more career development, and tax advantages in some cases.
Marcus Ritchie, PrimaryMarkets CEO highlighted, “For employees, it can be an attractive proposition, especially if the company is on the road to becoming a unicorn. Though with companies now staying private for many years, employees can be left waiting a long time to turn their share in the business into cash.”
There are also downsides and risks involved with equity compensation, including illiquidity, or salary opportunity costs where employees forego the flexibility and choice that comes with cash.
Some people will find that equity compensation suits their needs due largely to higher returns and future goals, while others may prefer a better salary depending on their circumstances.
Ritchie continued, “After recognising the growing desire for liquidity, PrimaryMarkets has created a platform where employees can sell their shares in private companies.
“Employees or other private shareholders can list their shares for sale on the PrimaryMarkets platform where the opportunity gets promoted to a network of global of 110,000+ investors.”
The platform enables eligible individual employees to list their shares at their own discretion or facilitate a wider group of employees or shareholders who are eligible to sell to create an active market for internal or external traders, driving liquidity and most importantly immediate value to employee shares.
In addition to employees, external sophisticated investors also benefit from the model with the chance to buy into a range of flourishing start-ups that would otherwise be inaccessible.
By increasing access to private investments, PrimaryMarkets drives diversification for sophisticated investor portfolios, in an asset class that is recognised as less volatile than public markets.
Employees are beginning to demand greater flexibility and more liquidation opportunities with their equity compensation, PrimaryMarkets platform can deliver that in a way that still give companies control over their employee’s equity sales.
PrimaryMarkets uses first-class technology to create an independent global platform offering pre-IPO opportunities and providing long-term investors with liquidity.