The Banking and Strategy Initiative

Chillin' out till it needs to be funded

Facebook's 500 shareholders | Advantage Dealbook

FaceBook Knows Everything!

Image by adamjackson1984 via Flickr

Are you one of the eager ones wanting to trade Facebook after the IPO? You can do so right now as long as the company does not file for one on Sharespost and Secondmarket among others. Goldman Sachs brokered the resale /first sale of another 3% of Facebook thru the private book building route too. However, even if you and I do not trade in Facebook, as long as Capitol Hill and Washington’s bevy of lawmakers do not speeden up the change game too much, Facebook., would be forced to report like a public company from April according to the NYT Dealbook. (now also at

Though, irrespective of what is their opinion, Facebook is not really incentivised to go for an IPO because it will be making additional disclosures anyway, it could be pushing Senators Toomey and Carper, the first Republican, the second Democrat to change the law which empowers SEC to regulate Facebook more strictly and with public company regulation.

The current threshold of 500 shareholders in case the senators succeed would then become 1000 or some other convenent number so that PE defense clauses and the resulting extra voting clauses for promoter shares among others stay within a controlled environment for promoters and are not discussions of accountability in the public space with share prices holding the PE and promoters hostage. Social media companies are particularly sensitive about their rare Financial data as it contrasts with the vast mindspace such internet start ups occupy and disclosures of financial data could be seen as prejudicial to their future plans and interest

Facebook sold only 3% of its equity via Goldman Sachs even when snagging a $50 bln valuation limiting inflows to $1.5 bln while a similar amount of seed capital could be worth 25% of the company or a similar amount of late stage equity for a PE could still be 10% though with only secondary sale objectives safeguarded among other host of safety clauses

This would be the main reason, private companies in the social media space could also be directing employees to not trade in their “equity” on such web only markets Facebook could easily be worth $20 bln on conservative valuation based on revenue alone and thus could very well prove in the next six months wehether it merits a valuation of $100 bln in the IPO Facebook hopes to join Visa, General Motors and AT&T in raising $10 bln in a single IPO


Image representing Facebook as depicted in Cru...
Image via CrunchBase

Related articles

Enhanced by Zemanta


%d bloggers like this: