MORGAN STANLEY AT WORK
As someone who has witnessed first-hand the complicated process of the path to IPO , Adams is passionate about her role and says companies that manage their equity programmes well not only benefit themselves but in turn , also change the lives of their loyal employees .
“ One of my personal missions in life is to make sure that capturing that opportunity doesn ’ t get lost on other people . It really can be a life-changing thing , and Morgan Stanley at Work can not only help the company have the underlying infrastructure to make those transactions happen , but on the participant side , ensure that people have the right resources to take advantage of what that opportunity brings to the table .”
A developing trend in private capital markets A good equity programme not only rewards employees but also creates a deeper investment culture within the organisation . If an employee can see the value of their shares rising as the company grows , it can incentivise them to work towards the company ’ s common goals . Equally , companies today may have to take into account lifestyle choices . Employees might have certain expectations in mind when they consider equity programmes at the joboffer level .
Today , as companies take longer to reach the IPO stage , they also have simultaneous opportunity to scale and grow . This means they have to offer competitive equity stake value or risk losing out to the
competition . The war for talent as we ’ ve known it for the last 10 years is beginning to slow , evidenced by the volume of layoffs , particularly in the technology sector . However , down markets may breed innovation because with mass layoffs comes a surplus of talented people that find themselves without work , have potentially realised some significant value from previous roles and are ready to solve new problems . Similar to companies that emerged in the aftermath of the 2008 financial crisis , Morgan Stanley at Work believes there will be a new period of innovation out of the current downturn as well .
Swan says : “ One of the big drivers in the evolving approach private companies take towards liquidity over the last decade was the war for talent . Private companies have become much larger , but the draw for startups to attract employees was always in the equity . You knew that you were taking a job where you were going to be fairly underpaid from a market perspective in your base salary . However , you ’ re going to have the upside of equity , which could create an asymmetrical outcome , financially , for yourself .”
But what happens if these companies stay private for longer ? “ Now , we have companies that are worth billions – even tens of billions of dollars and they ’ re financially sound – and they ’ ve raised a tonne of capital . But as valuations increase , you obviously don ’ t have quite the same upside in any new equity you receive as you did when you were a small startup worth a few million dollars ,” Swan says .
54 fintechmagazine . com | June 2023