Progressive Price Discovery for Private Companies
Charly Kevers, CFO at Carta, on progressive price discovery and investor relations
Market driven pricing turns private stock from a vague promise into an operating tool. When shares trade on a recurring cadence instead of only after a primary round, employees can sell small amounts at different prices, which lowers the all at once pressure that makes tender offers feel adversarial. For the company, those trades create a current outside reference point that can be used in recruiting, M&A, debt with warrants, and eventually a direct listing.
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Tender offers usually anchor to the last round, which is often stale by the time employees can sell. In a study of 64 tenders totaling more than $3B, 83% were priced at or below the last round, and average participation was only 37%, showing why employees often hold back when they think the company has outrun the reference price.
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Recurring liquidity changes seller behavior. In the private liquidity research, a quarterly or regular program lets employees trim 10% to 20% over time instead of trying to maximize one rare window. That tends to produce steadier pricing and gives CFOs a live market signal they can use to negotiate with investors, acquirers, and lenders.
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This is also part of becoming public ready while still private. Spotify used repeated secondary trading and regular disclosures before its direct listing, building a pricing history and investor familiarity. The same logic sits behind the push for progressive price discovery here, a company learns how the market values it before the stakes of a public debut.
The next step is a more hybrid private market, where the cap table stays issuer controlled but pricing updates more often. That gives late stage companies a middle ground between zero liquidity and a full IPO, and it shifts equity from a recruiting story on paper into something employees, investors, and CFOs can actually plan around.