Since the news of Twitter’s going public hit the scene, speculations were rife about the valuation and procedure for its IPO. Twitter refrained from making any comments on the procedure but it sure had the plans of keeping the employees who have good stock value in their hands. Pressure built for Twitter to liquidate the equity for cash as it could not let go of the veteran talent that held the stocks. The usual way a company does this, along with expanding capital is to have an Initial public offering. Twitter apparently has found a way to delay that IPO and still keep the equity holders happy by reaching an agreement with the Investment firm giant BlackRock to sell early employee and investor equity.
BlackRock, largest asset management company, has taken an $80 million stake in Twitter Inc. The private deal values the firm at $9 billion. Blackrock will buy the shares directly from Twitter employees. A report says that not many would get the chance to sell their stock as there are regulations regarding the same – the number comes out to be around a dozen. Twitter might actually manage to delay its IPO owing to the fact that these employees are high profile that affect the decision and policy internally.
There is a 500 shareholder limit internally at Twitter organization that regulates and regularizes the rules to file an IPO. The BlackRock deal could take care of it and not push Twitter over the edge to the independent sales in secondary markets. The company’s CEO Dick Costolo recently released a blog post that clarified the intentions of Twitter as an organization regarding IPO. It says that Twitter would follow new revenue streams.
Twitter is also wary of an IPO owing to the fact that the companies that had it were chewed up by the public market. Facebook botched its IPO by hyping it up as the must-buy of the decade, the stock faltered as soon as it opened, and the shares then crashed more than 50% over the next few months.
Facebook’s market reputation took a dive and IPO buyers were ruined effectively. There were lawsuits flying around and accusations commenced. The resultant was that Facebook COO Sheryl Sandberg resorted to comments like ‘We screwed up our IPO because we wanted to screw Wall Street.’ Zynga and Groupon suffered the same fate consequently. As markets are volatile, there will always be uncertainty regarding equity but whether Twitter needs to raise the expansion capital by an IPO will be apparent enough in the coming weeks.
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