Slack plans to go public to bypass the traditional IPO mechanism

According to The Wall Street Journal, Slack management plans to go public. At the same time, the company is inclined to the option in which the traditional IPO mechanism will not be involved. Shares will be placed directly, and the company's valuation will be about $ 7 billion.

About why more and more IT companies are choosing a direct placement mechanism - read our new material.

Slack and the stock market: some history

According to WSJ, Slack can go public in the second quarter of 2019. The company's plans to enter the stock exchange have changed several times. Last year, rumors spread to the press that Slack attracted Goldman Sachs to prepare an IPO for a company valuation of $ 10 billion.

At the same time, in November 2018, Slack founder and CEO Stewart Butterfield said in a commentary to the Fortune publication that the company does not have a specific time frame for an IPO: “For several years now we have been moving towards becoming a public company, and we plan to continue this work ".

Now, as journalists have found out, the Slack management is inclined to conduct a direct placement of shares instead of using an expensive IPO procedure, in which investment underwriters attract institutional investors. Despite this, the final decision on the form of access to the stock exchange has not yet been made.

Why do you need direct placement of shares

Many startups are increasingly using the mechanism of direct placement of shares instead of IPO - it is much cheaper. The services of underwriting banks that prepare traditional IPOs are expensive - usually underwriters charge from 2% to 8% for their services. That is, a significant amount of funds raised through IPO goes to intermediaries.

The direct placement mechanism (Direct Listing, DLP) allows investors or even employees owning shares of a company to sell them directly on the exchange. At the same time new shares are not issued.

The disadvantage of this method is that there is no guarantee of selling all the shares, and the company needs to organize the trading process on its own.

Last spring, the streaming service Spotify used this way to enter the stock exchange. On the day of the start of trading, the company's shares were worth $ 149 apiece, rose to $ 196.28 by July, but fell to $ 121 by the end of the year.

Recall that last summer Slack attracted another round of investments - then the company received $ 427 million, with an estimate above $ 7 billion. During all its existence, the company attracted $ 1.2 billion in investments during seven investment rounds.

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