Issuer-Controlled Auctions Improve Employee Liquidity
James McGillicuddy, head of strategy at Carta, on building an issuer-centric platform and investing in secondaries
The real point is that fixed price tenders are simple for buyers and issuers, but they often leave employees selling blind and cheap. In private markets, employees usually have the least leverage, the least information, and the most immediate need for cash. CartaX was built around auctions because recurring bidding can show what outside investors will actually pay, instead of forcing employees to accept a company set price that may lag the business’s current value.
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Tender offers were the default because issuers control the price and process, but that convenience often comes with weak outcomes for employees. In a dataset of 64 tenders and more than $3B of volume, 83% priced at or below the last round, and average participation was just 37%.
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The imbalance is structural. Investors and founders usually get earlier, better priced liquidity, while employees become meaningful sellers only once companies are much larger. By then, they are often selling common stock into a controlled event, not negotiating from a position of strength.
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Carta’s broader thesis was that issuers need a controlled market, not a broker free for all. The company chooses who can buy, how often liquidity happens, and what disclosures are shared. That gives management cap table control while still creating competitive bids and a clearer market price.
Where this heads is toward more structured, recurring liquidity windows that sit between no liquidity and a full IPO. The winners will be platforms that can give companies trust and control, while giving employees and investors a price formed by real competition rather than a one time administrative shortcut.