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What Are Liquidity Solutions?

Published on Jun 28, 2021 by Adam McCombs

Need Liquidity But Not Ready for an IPO? There’s a Solution to That

Many startups can feel locked into one of two options as they look to exit: an initial public offering or an acquisition. An IPO is an opportunity to restart, while an acquisition is an ending of sorts.

Choosing which exit strategy relies heavily on the current state of your startup and your future goals. But what if you need liquidity solutions now, but aren’t ready for either an acquisition or an IPO?

There is another option: Offering liquidity to investors before going public.

Liquidity Raising Middle Ground: Pre-Market Share Sales

Private markets took off in popularity after the passage of the 2012 JOBS Act, which had broad impacts on venture capital and private equity, and is a big factor in why companies are staying private longer. This trend to stay private means there is pent-up demand from employees and other shareholders who need liquidity.

A growing number of companies are seeking these pre-market liquidity options, where employees and other shareholders essentially shell their shares to investors without waiting for an IPO or an acquisition.

Pre-market share sales can help many emerging companies compete for talent while raising cash, as this offers the benefits of both private company growth and public-like liquidity. Employees who have been sacrificing for years in the startup environment can finally turn paper wealth into real wealth.

Industry-Leading Liquidity Platforms from Deal Box

For companies looking at the digitalization of their shares, Deal Box stands ready to help private companies connect to industry-leading liquidity platforms. Based in San Diego, we at Deal Box are champions of investment packaging, and our investment package for private companies is built on more than 17 years of experience, using a highly iterative, holistic process underpinned by industry-leading technology, rigorous analysis, and capital markets strategy.