Nasdaq Private Market is partnering with Scenic Advisement to offer broker services for private companies or their employees looking to sell equity.
Based in San Francisco, Scenic Advisement facilitates the sale of high-growth, late-stage private company stock, enabling founders and employees to cash out through secondary sales, or companies to raise primary capital.
Co-founder Michael Sobel, formerly Americas Head of Equity Trading at BlackRock, told Venture Capital Journal that such transactions were previously quite opaque, with “fairly large discounts associated with the back-and-forth.” It was difficult, for instance, to determine “how many shares were outstanding, to figure out an appropriate price.”
“We realized it was a big opportunity to work with companies, employees, and early investors,” Sobel said. “There’s a better way to do it.”
Scenic isn’t the first firm to enter this business, but it bills itself as uniquely committed to serving all parties by focusing exclusively on company-supported transactions and seeking out the most desirable investors.
Buyers include large global mutual funds, sovereign-wealth funds, government-sponsored pension plans and hedge funds. An auction obviously serves sellers’ interests better than a single-buyer transaction, and companies can avoid their shares being sold to short-term investors.
After finding investors and leading the due-diligence process, Scenic works through pricing dynamics. The company has been using Nasdaq Private Market’s platform for pricing deals and sees this partnership as “a pretty natural synergistic opportunity,” Sobel said, “to leverage Nasdaq’s brand and frankly their technological capabilities.”
The partnership isn’t exclusive: “We all believe in competition and competitive markets.” Sobel said the companies would hold themselves “accountable for providing the best capabilities to private companies across the country.”
A man uses an umbrella to guard against snowfall as he walks past the Nasdaq MarketSite in Times Square, Manhattan, on March 20, 2015. Photo courtesy Reuters/Adrees Latif