Morgan Stanley at Work has released its second edition of "Liquidity Trends: Perspectives from Private Company Leaders." The report highlights that private companies are increasingly planning for liquidity events amid economic and market uncertainty.
The report shows significant growth in equity compensation adoption, with 76% of companies now offering such plans. This is an increase of 11% since 2021. Furthermore, all decision-makers agree that equity compensation will become more crucial in attracting and retaining talent over the next five years.
There is a notable pressure on decision-makers to facilitate liquidity events, with four out of five feeling this pressure. Investors and employee stock owners are typically the source of this demand. Going public has re-emerged as a key goal, with 45% of private companies aiming for an initial public offering (IPO) as of January 2025, up from 13% in 2023. Conversely, fewer companies plan to remain private long-term.
Tender offers have gained traction over IPOs as the preferred next step for many companies, although only 5% feel very prepared to execute a tender offer compared to 41% who feel ready for an IPO. "While companies recognize the value of providing liquidity opportunities... there’s still a gap in understanding how to execute effectively," said Kate Winget, Chief Revenue Officer at Morgan Stanley at Work.
Morgan Stanley at Work has observed a significant increase in liquidity transactions in early 2025, surpassing all transactions from the previous year by May 2nd. Michael Gaviser, Head of GIMA at Morgan Stanley Wealth Management noted a rise in interest around private markets among investors during uncertain times.
The report coincides with Morgan Stanley Wealth Management's launch of its Private Markets Transaction Desk. This service allows eligible shareholders and investors to buy and sell shares in the secondary market.
The survey underpinning the report was conducted by Morgan Stanley at Work between January and February 2025 with senior leaders at private companies offering equity compensation plans.
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