FOMO Drives Opaque Late-Stage Secondaries
Ani Banerjee, co-founder of Andromeda Group, on secondary diligence and companies staying private
The core problem in late stage secondaries is that access often matters more than underwriting. In brokered deals for hot private names, buyers are pushed to decide in days, with limited company data, layered vehicles like SPVs or forward contracts, and little clarity on exactly what security they are buying. That setup makes brand name demand do too much of the work, so marquee companies can trade on scarcity and momentum instead of clean price discovery and full diligence.
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Banerjee describes a market where investors may only get a rough block size, a short deadline, and incomplete information on capital structure, ROFR mechanics, and seller motivation. That raises the risk of negative selection, where the shares being shopped most aggressively are the ones sophisticated holders most want to exit.
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Other secondary investors describe the same pattern from a different angle. Pricing in private secondaries often leans on public comps, sparse disclosures, and network checks rather than a full inside view of the company, especially when a seller cannot legally share internal data. That makes reputation and narrative unusually powerful inputs into valuation.
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The strategic appeal of issuer led venues like CartaX was that they could replace rushed broker syndication with tighter company control, standardized disclosures, and more orderly auctions. The big idea was not perfect liquidity, but enough structure that buyers compete on price with a clearer understanding of what they are buying.
This market is heading toward more controlled, company approved liquidity rather than pure backchannel trading. As private companies stay private longer, the winners will be the venues that reduce information gaps, standardize transaction terms, and let issuers decide who gets onto the cap table, while still giving investors a real mechanism for price discovery.