Who Needs A Public Market When Facebook Shares Are This Liquid?

New funds are helping to generate plenty of liquidity options for Facebook shareholders.

If you are a shareholder of Facebook shares, you have a lot of opportunities to resell them. Shares of the company have surged over the past couple years thanks to the private markets like SecondMarket, Second Shares, and private deals taking place behind closed doors. The latest liquidity opportunities included a reported transaction by Accel Partners, previously the largest venture shareholder, and now a new fund used to help Facebook Employees exercise stock options. With so many options to purchase shares, one has to wonder what the needs is for an IPO.

Granted, there are plenty of issues with any significant liquidity event, however shares appear to be trading all over the place recently and over the past month we’ve heard about a number of new funds being created to purchase Facebook shares. At this point, Mark Zuckerberg continues to be the largest shareholder and while new employees are being given stock in a company that could “one day be worth $100 billion”, Facebook is sucking up top tier talent from companies throughout the valley. At this point though the stock has received what some believe is an inflated valuation. While you could purchase shares of a company which is valued in the private market at $40 billion, it may take years for the company to actually live up to that valuation given that some estimates have put Facebook at a $2 billion annual run rate.

Then again, while all the recent transactions may make the company look relatively liquid, over $2 billion in Google shares are traded daily, a volume that only a public company could possibly handle. Not all these opportunities to cash out are necessarily worth it though. As the Wall Street Journal explains, the new fund is actually a way to lend money to Facebook employees who want to cash out early, despite hefty fees:

Now we’ve got word about a new fund with a different twist. It’s aiming to loan money to stock-option holders of Facebook – and other high-flying Internet companies such as LinkedIn, Twitter and Zynga – so they can buy the stock and pay the lofty taxes that come with exercising the options. […] 137 Ventures is raising as much as $100 million and is headed by Justin Fishner-Wolfson, a former principal at Founders Fund, which is an early Facebook investor. Working with Fishner-Wolfson is Alexander Jacobson, an entrepreneur and former entrepreneur in residence at Founders Fund, and Kathy Chan, a former early Facebook employee who worked for the company in communications and marketing.

It will be interesting to see how all this turns out!

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