Nasdaq Private Market, a subsidiary of Nasdaq, has acquired SecondMarket Solutions, a secondaries platform that helps private companies, their employees and investors, sell securities, mainly through tender offers. The terms of the transaction were not disclosed.
As start-ups and other venture capital-backed companies stay private longer, being able to trade shares on the secondaries market has become a key strategy for them to provide liquidity to employees and early investors.
“We pioneered initiatives in the private secondary market during the 2008 and 2009 recession and grew the business that facilitated over $550 million in trades by 2012,” Ben Siegel, former chief executive officer of SecondMarket and now head of Nasdaq Private Market, said in a statement on Thursday. “But we sensed that private companies needed more structure and control over secondary trading in their shares.”
SecondMarket, which was founded in 2004 with the goal of bringing liquidity to illiquid markets, then shifted focus in 2013 to exclusively service company-sponsored transactions and away from brokering one-off trades. So far, the New York-based company has facilitated more than 70 company-sponsored tender offer programs and proceeded more than $2.5 billion in transaction volume.
As a result of the transaction, the SecondMarket team will join Nasdaq Private Market.
“The combination of Nasdaq Private Market and SecondMarket provides an exceptional platform for private companies to manage their equity and provide liquidity events for employees and investors,” said Nelson Griggs, executive vice president at Nasdaq and a board member of Nasdaq Private Market. “This transaction … creates new opportunities to serve the equity needs of companies throughout their time in the private arena.”
In its first half of the year report, SecondMarket found that in more than 80 percent of the secondaries transactions it facilitated, either the company bought the shares using excess balance sheet cash or a third party only participated as a secondaries investor.
Some of SecondMarket’s clients include DocuSign, Pinterest, Shazam and Tango.
Separately from this transaction, Nasdaq now has full ownership of Nasdaq Private Market, following the recent acquisition of the minority stake previously held by SharesPost.