Secondary Direct Market
What is the Secondary Direct Market?
Publicly-owned companies are listed on one or more exchanges, such as the NYSE or NASDAQ, and there exists a liquid market for their secondary shares. In contrast, shares in privately-owned companies are generally illiquid.
Investors in privately-owned companies are typically long-term shareholders. They sell their positions when the company has a liquidity event, either an IPO or when the company is acquired by a publicly-owned company. In the case of technology companies, and depending on market conditions, these liquidity events may take many years, sometimes beyond the life of the investment vehicles holding such investments.
In recent years, more and more private equity investors have been seeking liquidity for their portfolios, or their equity positions in individual private companies, by entering into negotiated agreements – Secondary Direct transactions – with qualified buyers, firms such as Novirian Capital.
Sellers are typically: