Key Insights on Liquidity Trends from Private Company Leaders

Morgan Stanley at Work interviewed over 300 private company decision-makers on how they are rethinking their approach to liquidity in the midst of a rapidly evolving macro environment. The following are the key takeaways from the June 2023 Liquidity Trends: Perspectives from Private Company Leaders report.

Liquidity Trends in an Evolving Market

In the past, an initial public offering (IPO) was the prevailing avenue for achieving liquidity. However, as companies are staying private longer and access to capital in the private markets continues to increase, alternative paths to providing liquidity to employees and shareholders have emerged. Additionally, the IPO landscape has seen a slowdown in recent years and because the IPO window can be unpredictable, a public listing is not always available to a company. For decision-makers, this tension is especially nuanced—requiring them to balance the constraints of the market, their business goals and the increasing expectations for liquidity.


Key Takeaways from the Research

Companies are staying private longer

With the current market volatility and the growth of private capital markets, more companies are delaying an IPO or are uncertain of what their next move should be.


plan to stay private longer


are unsure or questioning the next steps    


are eager to IPO

The perceived value of equity continues to rise

Despite market uncertainty, equity ownership remains crucial for employees and stakeholders.

73% of private company decision makers report that equity has become more valuable to prospective talent.

There is a growing expectation for liquidity events

Companies of all sizes and stages agree there's an increased expectation for liquidity

Private decision-makers report an increased expectation for liquidity among stakeholders. For example, 52% of companies with less than 500 full time employees (FTE) and 66% of companies with more than 500 FTE report an increased expectation. When we look at the data through the lens of investment funding, 62% of companies that have completed a series B or less funding, compared to 55% of those with Series C funding or greater, report an increased expectation. Through the lens of valuation, the pressure is the equal: 58% of companies with a valuation of less than $400MM and 58% of those with a valuation of $400MM or more report an increase in expectation for liquidity.

There is an opportunity for alternative paths to liquidity

Increasing expectations for liquidity among prospective talent—coupled with the desire to stay private longer—creates a unique opportunity for companies to explore alternatives to tender offers, such as controlled liquidity.

93% report the possibility of having a liquidity event is valuable to a prospect's employment decisions.

When Do Companies Hold Liquidity Events?

Private market decision-makers agree that the timeline for liquidity events often depends on several consideratons:

71% consider annual revenue of the company

66% rely on the most recent valuation

70% look at market conditions

As companies stay private longer and longer, they need to have more and more access to liquidity. We’ll see more and more companies utilize different equity vehicles... As long as you have liquidity and no IPO in sight, employees want more and more control over what they get, when they get it and how they can liquidate it ... I think it would be great to see giving employees the kind of power to ‘choose their [own] destiny.’
Director of Payroll and Stock Administration at enterprise private company (5,000+ FTE)

Key Considerations for Decision-Makers

The expectation for liquidity events is on the rise within the evolving talent landscape. In light of this, decision-makers should carefully consider these steps to effectively navigate the path towards a successful liquidity event:

Identify business goals for strategic alignment.

Design a timeline for success.

Create clear terms for optimal results.

Boost liquidity event participation with employee education.

Help navigate legal and tax implications.

You have a vision. We have a plan.

To learn more about private company liquidity, download the full Liquidity Trends: Perspectives from Private Company Leaders report.