[pilom]

The founders and everyone else with current equity in Facebook need a liquidity event. They are all collectively sitting on $100 Billion worth of value but right now the only way for them to see anything from that value is to collect their share of the profits (if Facebook is even distributing profits as opposed to rolling them into future growth spending). The IPO gives them a chance to actually collect some cash for the value of their shares and live like the millionaires their tax returns say they should be.

[gfodor]

How is this true anymore with secondary markets? Surely the founders and first employees are all rich by now.

[trotsky]

I believe that facebook won't allow current employees to trade on the secondary markets (though obviously there will be exceptions to that rule). I also believe that it's been years since facebook has been compensating with actual stock (since '07?), my understanding is that they take the form of restricted stock units that convert into stock once the company is public. This was to avoid breaking 500 shareholders at the time.

I doubt any of those are a primary concern - I think it's much more likely that since they broke 500 shareholders last year they've just assumed they would. With a calm, up market it's probably a better time to IPO than recent conditions. Being able to put $10B in the bank for a rainy day is nothing to sneeze at.

[chollida1]

There are often restrictive covenants on employee's wrt what they can sell of their vested stock when a company is private.

The largest secondary market (secondaryMarket) allows the company to list the terms of who, how and when their stock can be traded.

[ojbyrne]

My understanding is that the IPO is because of the 500 shareholder rule: http://dealbook.nytimes.com/2011/01/03/facebook-and-the-500-...

[guan]

The 500 shareholder rule requires the companies covered to register with the SEC, but not necessarily to publicly list their stock. They could register and stay private.

However, registration means that they have to publish almost the same information as public companies do and be subject to many of the same regulations. Since there are some benefits to going public, such as liquidity for current shareholders, few companies choose to register and stay private for very long.