The secondary market for private company stock appears to be keeping pace with the U.S. economy: a rebound is underway, but not as strong a bounce as might be expected.
Transactions involving the direct sale of private company stock so far this year have at least doubled last year’s $2.4 billion volume, according to Laurence Allen, managing member of the NYPPEX LLC, a broker for secondary transactions.
While the rebound is nothing to shrug aside, Allen pointed out at the Private Company Stock Conference in Palo Alto today that earlier this year he expected transaction volume to climb as high as $9.6 billion.
Still, secondary transactions are fueling an active market. Daniel Burstein, managing partner at Millennium Technology Value Partners, said his firm has done more than 100 transactions in the past 12 months. That compares with about 60 to 70 in the previous 12 months.
“The market is growing enormously,” he says.
Allen agrees. Last year, one-fifth of 1% of all private company stock changed hands. This should grow to 5% in two to three years, he says.
“There should be a steady supply coming,” Allen says.