Slack IPO: What Investors Need To Know About Direct Listings
2019-06-22 09:16

Workplace messaging software company Slack Technologies has filed for an IPO, but it isn't using the traditional method of going public. Instead, Slack -- a service that aims to foster efficiency and collaboration among coworkers through chatrooms -- is choosing to pursue a direct listing of its shares, becoming the second major company to do so in the past year. Spotify Technology (NYSE:SPOT)used the same method when it went public in 2018.

工作场所通讯软件公司Slack Technologies已申请上市,但没有采用传统的上市方式。Slack是一项旨在通过聊天室提高员工工作效率和互相协作的服务,它选择直接上市,成为过去一年里第二家这样上市的公司。Spotify Technology (NYSE:SPOT)在2018年上市时也采用了同样的方法。

While we don't yet know the timetable or most other details of Slack's potential IPO, here's a rundown of how a direct listing is different from a traditional IPO, and why the company may have decided to use this route.


What is a direct listing?


Generally, when a company wants to do an initial public offering, or IPO, they will hire one or more underwriters. Think major banks with investment banking operations like Goldman Sachsor JPMorgan Chase. These underwriters essentially facilitate the process -- determining the initial offering price, dealing with regulatory issues, and selling the shares to the initial investors.

一般来说,当一家公司想要进行首次公开发行(IPO)时,他们会雇佣一个或多个承销商。想想拥有投资银行业务的大型银行,比如高盛(Goldman sachs)或摩根大通(JPMorgan Chase)。这些承销商在本质上推动了这一过程——确定初始发行价,处理监管问题,并将股票出售给初始投资者。

On the other hand, a direct listing, also known as a direct public offering, or DPO, is a process by which the company sells its own shares directly to the public. There are no underwriters involved. In simple English, the company's existing shares are listed on an exchange, and people who own them, such as the company's existing investors, can choose to sell their shares directly on the public markets.


By using a direct listing instead of a traditional IPO, companies aren't raising any new capital, as they do in a traditional IPO. Rather, it simply creates a public market for existing investors' shares.


Why might Slack want to pursue this route?


According to The Wall Street Journal, citing people familiar with the business, Slack has significant cash on its balance sheet, which explains why it wouldn't need to raise capital in an IPO.

据《华尔街日报》(The Wall Street Journal)援引知情人士的话说,Slack的资产负债表上有大量现金,这就解释了它为什么不需要在IPO中筹集资金。

If a company doesn't need to raise new capital there are a couple of key advantages of a direct listing, such as:


  • No need to pay underwriters or other third parties. This can be a major money-saver when compared with the traditional IPO route. The company still hires some advisors -- in fact, Slack is working with Goldman Sachs, Morgan Stanley, and Allen & Co. on the deal (the same advisors when Spotify directly listed its shares). However, the costs are significantly lower.
  • There is no lock-up period, meaning that insiders don't have to wait a certain amount of time after the IPO before selling shares. Existing investors are free to cash out and sell their shares to the public on day one if they choose to do so. Slack was most recently valued at $7.1 billion after an August funding round, and insiders have indicated that the company's public listing could result in a similar valuation, so it's fair to assume that insiders could be in for a hefty payday when the listing is completed.
  • 不需要支付给承销商或其他第三方。与传统的IPO方式相比,这可以省一大笔钱。该公司仍然聘用了顾问——事实上,Slack正与高盛(Goldman Sachs)、摩根士丹利(Morgan Stanley)和Allen & Co.就这笔交易进行合作(Spotify直接上市时的顾问也正是这些顾问)。然而,成本要低得多。
  • 没有锁定期,这意味着内部人士不必在IPO后等待一定时间再出售股票。如果现有投资者愿意,他们可以在第一天将股票向公众出售变现。Slack最近一次估值在去年8月的一轮融资之后,为71亿美元。内部人士表示,该公司的公开上市可能导致估值相差无几,因此,我们有理由假设,上市完成后,内部人士可能会获得丰厚的薪酬。

To be clear, there are some risks involved with a direct listing. In a traditional IPO, underwriters market the shares to investors and help establish an initial price. With a direct listing, the share price is largely governed by simple supply and demand dynamics.


When Spotify went this route in 2018, the process went smoothly and its efforts produced solid results as the company shares roughly maintained the IPO price. But Spotify was already a brand well known to the public, making it easier to sell to retail and institutional investors.


So, why might Slack have chosen the direct listing route? Most likely, it's because the company's immediate capital needs are met and management feels that there is enough public demand for its shares to support the stock price. And, the ability for early investors and other insiders to cash in some of their shares immediately likely doesn't hurt. It is yet to be seen whether the company will be able to capitalize on its unicorn status.


This article originally appeared in the Motley Fool.

这篇文章最初发表在Motley Fool上。

Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

马修·弗兰克尔(Matthew Frankel), 国际金融理财师,没有持有上述任何一只股票。Motley Fool未持有上述股票没有头寸。Motley Fool有披露政策。

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