Secondaries on the Rise: How Companies Are Finding Liquidity Amid IPO Uncertainty

As IPOs remain a cautious consideration for many businesses, new research from Ledgy’s State of Equity 2025 report reveals a growing shift toward secondary share sales as a preferred liquidity option for companies. This trend underpins a strategic pivot in the equity landscape, providing flexibility for shareholders while alleviating the pressure to go public in uncertain markets. Secondaries gain momentum amid IPO uncertainty With IPO markets still navigating macroeconomic headwinds, Ledgy’s report shows that 77.8% of businesses are either very likely or somewhat likely to run a secondary share sale within the next 12 months. Secondary share sales are emerging as a critical liquidity mechanism, offering founders, employees, and early investors opportunities to cash out without an IPO. The rise of secondaries also aligns with initiatives like the UK government’s Private Intermittent Securities and Capital Exchange Systems (PISCES) framework, which aims to support the creation of a regulated, efficient secondary marketplace. By providing clear pathways for liquidity without going public, PISCES is expected to bolster confidence among businesses and investors navigating Europe’s evolving equity landscape. However, the report highlights a gap in employee understanding of secondaries, with 83.2% of employees wanting to participate, but only 50.4% stating they fully understand what a secondary share sale entails. "Secondaries are reshaping how companies think about liquidity, especially in Europe where IPO pathways are evolving," said Yoko Spirig, Co-founder and CEO of Ledgy. "For all stakeholder groups to truly benefit from secondaries, companies must take education more seriously given the current level of understanding." IPO preferences in the UK and EU: Mixed signals While IPO plans are gaining traction overall — 55% of businesses are more likely to consider an IPO now compared to 12 months ago — the landscape remains complex:

• UK Market Strengthens: 84% of UK respondents said they’d prefer to IPO in the UK, up from 72% in 2024. This contrasts with recent high-profile cases, such as Revolut, turning to overseas markets, signaling a mixed narrative for the UK IPO environment.
• EU Market Lags: Only 52.8% of businesses outside the UK said they’d IPO in the EU, with many favoring the US (26.8%) or the UK (12.4%), highlighting the need for reform to make EU exchanges more attractive.

Equity as a magnet for talent and retention The report also sheds light on the increasing importance of equity as a key driver for recruitment and retention. And companies are taking note.

• 25% of tech workers said they would only apply for roles offering equity, while 79% of employees stated that equity ownership positively impacts their motivation at work.
• Equity retention is especially strong for senior roles, with 72% of C-suite employees more likely to stay with their employer when offered increased equity stakes.

Compared to last year’s report, European companies have only reported an increase in equity ownership, with Germany seeing a 73% positive change, the Netherlands seeing a 59% positive change, and the UK seeing a 15% positive change. A European shift and an optimistic future for tech While dominant rhetoric in the ecosystem is about how European tech is seemingly lagging behind, a significant shift in equity thinking demonstrates that there is reason to be optimistic about its future. “Equity is a critical component of employee engagement and long-term value creation, and European companies recognise this,” says Spirig. “While equity in Europe and especially in distributed teams is more difficult due to the fragmented markets, taxes and regulation - many of the same reasons blamed for the lag in European tech - the increase in its distribution shows that these are not a deterrent for the teams on the ground. Ledgy was built to champion Europe’s most innovative companies and serve as a source of empowerment, providing them with the tools to navigate the complexities of equity management while ensuring that employees fully benefit from their ownership.”