A direct listing is a viable option only for companies that can afford to forgo the cash boost IPOs typically provide. That appears to be the case for Slack, which raised a $427 million funding round at a $7.1 billion valuation last August. The company is expected to go public in the second quarter of 2019.

Startups may be enticed to try a direct listing to avoid the pricey underwriting fees associated with a traditional IPO, but it’s also a risky move if a company can’t generate sufficient investor interest on its own. Music-streaming company Spotify is the only company to go through the process in the U.S., tapping Goldman Sachs, Morgan Stanley, and Allen & Co as advisers. Slack is working with the same trio for its own listing, according to WSJ.

“One of the things you need to go public is a high degree of predictability,” Butterfield said. “When you’re growing more than 100 percent a year, a little change results in a big delta.”

Published on: Jan 11, 2019

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