5 ms·

> the reality is that no institutional investor can sell a 10% (or whatever) stake in a public company overnight They can, however, sell much of it during the

> the reality is that no institutional investor can sell a 10% (or whatever) stake in a public company overnight They can, however, sell much of it during the 3 month head start they will have over everyone else.

twoodfin 11y ago
Sure, but isn't this whole deal premised on the notion that if investors want to head for the exits 3 months after the IPO, Spotify (and its employee shareholders) are fucked anyway? I agree it has to have some diluting effect, but if this capital is the difference between a successful IPO and a failed one, I'm not sure how you argue it represents a loss of value to employees.
- Retric 11y ago
  If 80+% of your assets are in just one company you don't control then you really should be heading for the exits. Google quickly hit 6x there IPO, but if you had say 5 million at IPO and nothing else then selling 1 million of that would have been a really good idea. Or at least getting a put option to sell near the IPO price. Granted, you must pay taxes ect. But taking 20% off the top is generally a really good idea.
  - dopamean 11y ago
    Who said 80% of any of the investors assets are in just one company?
    - AngrySkillzz 11y ago
      I think they are talking about employee shareholders.
    - hinkley 11y ago
      My first rodeo, my existing options were worth about $40k on buyout day. That's chump change, even counting inflation, but I was a kid so that more than doubled my assets. Everybody was pretty happy. Five months later we were all almost under water, and half our raises were more stock options (I don't know what kind of psychadelic drugs come up with that plan). Nobody was happy and productivity tanked. And still we were doing a better job than our new masters. By the end of the lockup period our options were worth 60% of the strike price. In the end I learned the hard way about a bizarre strategy for keeping your company going. First, have a high valuation. Second, find a small company with liquid assets. Third, buy out the company with a stock swap and only a little cash. And now you have more capital on hand so you can lie to your investors for a few extra months. Not that I'm bitter.
  - twoodfin 11y ago
    I agree. I'm not arguing that employees shouldn't cash out when they can. I'm saying that if investors as a whole are getting cold feet 3 months after the IPO, those employees were never likely to be able to recoup much value from their equity in the first place, regardless of whether these lenders get to dive off the sinking ship first.

twoodfin 11y ago

Sure, but isn't this whole deal premised on the notion that if investors want to head for the exits 3 months after the IPO, Spotify (and its employee shareholders) are fucked anyway? I agree it has to have some diluting effect, but if this capital is the difference between a successful IPO and a failed one, I'm not sure how you argue it represents a loss of value to employees.

Retric 11y ago
If 80+% of your assets are in just one company you don't control then you really should be heading for the exits. Google quickly hit 6x there IPO, but if you had say 5 million at IPO and nothing else then selling 1 million of that would have been a really good idea. Or at least getting a put option to sell near the IPO price. Granted, you must pay taxes ect. But taking 20% off the top is generally a really good idea.
- dopamean 11y ago
  Who said 80% of any of the investors assets are in just one company?
  - AngrySkillzz 11y ago
    I think they are talking about employee shareholders.
  - hinkley 11y ago
    My first rodeo, my existing options were worth about $40k on buyout day. That's chump change, even counting inflation, but I was a kid so that more than doubled my assets. Everybody was pretty happy. Five months later we were all almost under water, and half our raises were more stock options (I don't know what kind of psychadelic drugs come up with that plan). Nobody was happy and productivity tanked. And still we were doing a better job than our new masters. By the end of the lockup period our options were worth 60% of the strike price. In the end I learned the hard way about a bizarre strategy for keeping your company going. First, have a high valuation. Second, find a small company with liquid assets. Third, buy out the company with a stock swap and only a little cash. And now you have more capital on hand so you can lie to your investors for a few extra months. Not that I'm bitter.
- twoodfin 11y ago
  I agree. I'm not arguing that employees shouldn't cash out when they can. I'm saying that if investors as a whole are getting cold feet 3 months after the IPO, those employees were never likely to be able to recoup much value from their equity in the first place, regardless of whether these lenders get to dive off the sinking ship first.