Morgan Stanley agreed to buy a trading platform for shares in private companies, the latest move by Wall Street to expand offerings for fast-growing startups.
The deal for EquityZen will make it easier for clients of
The tie-up "brings an institutional-grade infrastructure to a marketplace that hasn't always been easy to navigate for buyers or sellers and certainly not for the issuers,"
Winning closely held companies and their executives as clients has become a key battleground for the biggest U.S. banks as many upstarts opt to stay private for longer. Take OpenAI for example: the world's most valuable startup is worth $500 billion — more than all but the top 16 companies in the S&P 500 Index. The dynamic leaves investors clamoring for access, and growing demand among employees to monetize their shares.
Morgan Stanley's purchase of EquityZen — the bank's first acquisition under CEO Ted Pick — is its latest volley in the space. The two firms were in discussions for nearly two years, Finn said.
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Earlier this year, the bank added a special designation for hundreds of advisors focused on managing the wealth of founders, investors and employees of private companies. It also has a partnership with Carta, which does equity management for startups: Morgan Stanley is Carta's preferred platform for clients going public, and its wealth-management offerings are integrated into Carta.
Meanwhile, rival Goldman Sachs agreed to buy venture-capital investor Industry Ventures earlier this month, while JPMorgan Chase has been bringing its heft to Silicon Valley after
Pick, who took the reins at Morgan Stanley nearly two years ago, has until now refrained from making any acquisitions.
Morgan Stanley's investors have been increasingly eager for his thoughts on the topic, particularly as the firm scored a lower capital requirement from the Federal Reserve and is poised for further relief. He said on an earnings call earlier this month that over time, the firm can "consider carefully" whether any of the many acquisition opportunities "coming at us" is a good fit.
His predecessor, James Gorman, did a series of deals in the later years of his tenure: scooping up Eaton Vance, E-Trade and stock-plan administrator Solium Capital, which became the workplace channel within Morgan Stanley's wealth-management arm. That business helps the bank make inroads with private companies and their executives.
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EquityZen, which was founded in 2013, has touted the transactions it facilitates as "company-approved" — a dynamic Morgan Stanley plans to include in its future offering, according to the statement. The New York-based startup has more than 800,000 registered users and has facilitated transactions across over 450 companies. It has about 50 employees that will join Morgan Stanley when the deal is completed.
Bloomberg reported in 2021 that EquityZen was considering a possible sale and could fetch more than $700 million in such a transaction, though fintech valuations have come down since then. Morgan Stanley expects to incur about $100 million in integration costs tied to the acquisition, the majority of which will take place over the next two years, according to a spokesperson.
"Our entire mission has been to bring private markets to the public," EquityZen CEO Atish Davda said in the statement. "By integrating into Morgan Stanley, we will reach more investors and shareholders than ever before."
