Bloomberg Law
March 20, 2019, 9:46 AM

Spotify’s Direct Listing Offers Lessons for Big Tech on Legal Risk

Jacob Rund
Jacob Rund

Selling shares directly to the public, often seen as a risky IPO alternative meant for cash-strapped startups, could be less perilous for some well-established technology companies like Slack Technologies Inc.

Direct listings — due to a lack of rigorous price-setting and safety measures — inherently invite more volatility than most initial public offerings and can increase the likelihood of disclosure-focused securities lawsuits for companies. But deep-pocketed tech darlings might be more inclined to take that chance, especially after Spotify AB’s decision to bypass an IPO to list shares in April 2018.

Workplace software provider Slack is planning a direct listing, ...