Facebook Manufactures Liquidity for Employees – Good Move

Eric (on a roll) Eldon is reporting that Facebook is going to announce that it will let employees “cash out” at an internal valuation of $4b.  This amount is well under the valuation that Microsoft placed on the company.

Facebook has an internal valuation of $4 billion, as Venturebeat previously reported. It will begin letting current employees sell 20 percent of their fully vested stock options at that valuation, starting this fall.

Ok I think that Facebook’s engineering of an liquidity event for their employees is a good thing.  I’ve said on this blog that Microsoft’s run at buying Facebook was their IPO.

My sources inside Facebook and at Microsoft both admitted that employees at Facebook were getting restless given that an IPO is not in sight.   The opportunity for employees to sell some of their vested shares in this deal is great for employees and good for the company.

Author: John

Entrepreneur living in Palo Alto California and the Founder of SiliconANGLE Media

4 thoughts on “Facebook Manufactures Liquidity for Employees – Good Move”

  1. It is refreshing to see at least something more reasonable than the huge $15 billion finally but still I think that even this figure is kind of too high for this over-hyped social network.

  2. how can one be rewarded with money for work at a company that has never made money? it is working the system, but no measure of human value. like bezos, cashing out before amazon had made a cent. it is taking money from investors, not creating actual value.

    this mindset is at the root of much of america’s financial difficulty, don’t you think?

    the home run mentality, managing for the next quarter’s results, it seems to lead to long-term trouble. why glorify it?

    am i wrong?

  3. Gregory,
    I would argue that Facebook is already a home run. The employees deserve to cash out something given no market for their stock.

    That being said homeruns are not likely in most cases. The bigger problem is lack of liquidity. That is troublesome for entrepreneurs and VCs.

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