The private market ecosystem experienced strong growth in 2021. The number of recognized unicorns (defined as private companies having $1B+ valuation) grew from 564 in 2020 to 882 in 2021. Nasdaq Private Markets’ (“NPM”) 2021 Annual Report noted that in addition to elevated deal size for companies, secondaries have evolved as an avenue to provide investment allocations to strategic investors not able to engage through primary fundraising rounds. The Report highlighted certain notable trends in the secondary liquidity market:

  • Amidst a talent shortage and robust competition for top talent, employee recruitment and retention is a priority for companies engaging in secondary market transactions as they integrate such secondary liquidity programs into their overall growth and retention strategy.
  • Heightened investor demand for private company securities means secondary valuations are increasingly converging with primary round valuations. Across all company-sponsored secondaries in 2021, the median discount remained at 0.0%, and 11% of programs were at a premium to the last primary round.
  • There is increased global adoption of secondary market transactions despite different regulations across jurisdictions.
  • During 2021, 70% of the transactions were third-party offerings and the remaining 30% were company repurchases. The NPM platform saw total transaction volume in excess of $13billion with 146 liquidity programs completed in 2021.