Last-Round Pricing Misprices High-Growth Companies

Using the last round as the tender price quietly shifts value from employees to insider buyers. In private markets, a company may only get a new price every 12 to 24 months, but the business can double revenue, add major customers, or move much closer to IPO in between. When the tender simply reuses the old round price, that progress is not reflected, which is why underpricing is worst for the fastest moving companies and why participation drops when employees think the bid is too low.

• The data shows this is systematic, not anecdotal. Across 64 tender offers and more than $3B of volume, 83% priced at or below the last round, and tenders with heavier underpricing saw employee participation fall into roughly the 10% to 30% range instead of 30% to 50%.
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• The market structure explains the mispricing. Most tenders are closed door deals with one invited buyer, often an existing investor or board level insider, so sellers are not really naming a price. That is one sided price discovery, which makes a take it or leave it offer easy to run, but weak at finding fair value.
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• The clearest comparables are companies that later hit public markets well above prior tender levels. Asana employees sold in a 2019 tender at $15.82 before the company went public less than a year later at $28. Snowflake employees sold at $38.77 in February 2020 before the stock reached $253 on its first trading day in September 2020.
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The direction of travel is toward more frequent, more competitive secondary pricing, with broader investor access and more disclosure. As private companies stay private longer, the ones that build recurring liquidity and real price discovery earlier will recruit better, retain better, and reach public markets with a much more credible valuation anchor.