Private market transaction prices down -10%
Comment of the Day

March 28 2022

Commentary by Eoin Treacy

Private market transaction prices down -10%

This blog post from Forge may be of interest so subscribers. Here is a section:

In February, we reported that seller interest outpaced buyer interest on the Forge platform as the broader market downturn led more employees to inquire about selling their vested equity.

These trends now show up in completed transactions. On average, prices in February fell –10% for companies that traded on Forge Markets in both Q4 2021 and February 2022.2 Meanwhile, the Renaissance IPO ETF, which holds many of the newest public tech companies, lost –28.4% from the beginning of October through the end of February.3

Although some softening has started to appear in the private market, the overall picture does not suggest overreaction. Decreasing prices may be new territory for some pre-IPO shareholders, but they seem to be proceeding cautiously. For investors, more sellers participating in the private market may yield a better opportunity to land shares of pre-IPO companies at favorable prices.

Eoin Treacy's view

Since the 2009 lows, the value of private companies has surged as successive waves of new money chased the promise of outsized returns. The persistence of the low interest rate environment and central bank willingness to increase money supply have been central factors in supporting valuations. 

Click HERE to subscribe to Fuller Treacy Money Back to top