Forge CEO says it's 'a company with unprecedented data' after $160M SharesPost acquisition

On Tuesday, Forge acquired SharesPost in a $160 million dollar deal. Yahoo Finance's Alexis Christoforous and Brian Sozzi discuss the deal with Forge CEO Kelly Rodriquez in an exclusive interview. They also discuss the state of the IPO and M&A market.

Video Transcript

ALEXIS CHRISTOFOROUS: It looks like the US markets have found their footing, at least for now during this COVID-19 crisis. And we're also starting to see some signs of life in the private market as well. Joining us now is the CEO of Forge. Kelly Rodriquez. Kelly, good to see you, and welcome to the show.

You are in a niche market. It's a growing market. It's a niche market. I'm curious what you're seeing in the secondary market right now. What are transactions looking like? And what's demand, and for that point, even supply looking like in the pre-IPO market?

KELLY RODRIQUEZ: Great to be here. The last three years, the secondary markets for private stock have really come on. But I think we're still in the sort of first or second inning.

With respect to what's going on now, if you look at the last couple of weeks of March, when we all went home, started working from home, we saw an unprecedented spike in supply. So as you would expect, we saw a significant amount of sellers come. In fact, sellers to buyers was three to one for the last couple of weeks of March.

In April and now in May, we've seen that flip around. I think the market was looking for its price point relative to public markets. And so we're now seeing pickup of volume across the board, but a much more balanced market now.

BRIAN SOZZI: Kelly, big, big day for you. You're combining in a $160 million deal with one of your rivals, SharesPost. Why is now the right time to make the acquisition?

KELLY RODRIQUEZ: Well, we see the market continuing to expand. And scale was a big factor for us. We see the winner in this space being a company that provides a combination of unprecedented data and transparency technology that serves the market for fast, easy trading, and for companies and employees. And just the scale requirements as this market expands this year, we thought this was the right time.

ALEXIS CHRISTOFOROUS: Kelly, I know that you're going to be running the combined company. There is some overlap here, that SharesPost is a rival of yours. Any idea what payroll might look like? Are you going to have to sort of tighten the belt a bit?

KELLY RODRIQUEZ: You know, most-- most of the companies that were going to tighten their belt around this time frame have already done it. SharesPost and Forge are no different. We see this as an expansive combination.

They were a real trailblazer in the space. They've been around for 11 years. We have very complementary customer bases. So this is going to be accretive at all levels. And we're really excited about what it means for the market.

ALEXIS CHRISTOFOROUS: What about the IPO market right now? I mean, some companies may say what a disastrous time to go public and come to market. But we are still seeing activity there. What are you seeing?

KELLY RODRIQUEZ: Well, for the most part, the expected companies that were going to go have put-- hit the pause button. It doesn't mean that they're not trading, and people aren't seeking liquidity and seeking to own some of those stocks. But for right now, we're not seeing any activity. And we're really focusing on just providing that liquidity and capital to companies that need it to stay private.

BRIAN SOZZI: Kelly, what does this acquisition let you do in the battle against NASDAQ? NASDAQ went out there in 2015, bought SecondMarket. How does this help you compete more effectively with them?

KELLY RODRIQUEZ: So the world is changing since then, and quite a bit in the last year. These company buybacks or tender offers have been the sort of structure that's used up to now to provide shareholder liquidity. We see a much more flexible trade environment out there, where the company is not buying back at a discount, and where employees and shareholders are actually getting full market price for their shares.

And that's part of where Forge and SharesPost come in. The knowledge and data around pricing and bid and ask across most of the top 500 companies in the world are with Forge and SharesPost. So if you want to trade in this market, you want best price. You're probably not going to be focusing on tender offer buybacks in the next couple of years.

ALEXIS CHRISTOFOROUS: Kelly, what do you think is going to be the next big catalyst for the secondary market at this point?

KELLY RODRIQUEZ: Well, the market itself has been expanding for the last few years. I think the regulatory environment, the SEC, they've talked about in the last year opening up access. This is one of the highest-- this is the highest-performing asset class in the world, private stock, for the last 10 years. Why shouldn't more Americans, why shouldn't more global investors have access to it? So I think we're going to see an opening of regulation.

ALEXIS CHRISTOFOROUS: All right, something to look out for. Kelly Rodriquez, CEO of Forge, thanks for coming on. And best of luck with the SharesPost acquisition.

KELLY RODRIQUEZ: Thank you very much. Great to be with you.