The Donerail Group has launched Donerail Private Markets, a dedicated institutional platform for secondary transactions involving shares of large late-stage private companies, including individual blocks valued at more than $1 billion.
The Los Angeles-based merchant bank and investment advisory firm will focus the platform on companies operating across artificial intelligence, enterprise software and financial technology.
Donerail Private Markets is designed for institutional investors seeking to buy or sell significant positions in private companies that have reached valuations and scale historically associated with public markets but are remaining private for longer periods.
The new platform will operate across three primary areas.
First, it will provide agency execution for large block transactions between institutional counterparties.
Second, Donerail will structure liquidity solutions for founders, early employees, early investors and funds seeking to monetize concentrated holdings.
Third, the platform will design and coordinate company-sanctioned tender offers and other structured secondary transactions for issuers and their boards.
Donerail Private Markets will operate through GT Securities, Donerail’s affiliated registered broker-dealer.
The launch reflects a broader change in the structure of private technology markets.
Some of the largest and fastest-growing technology companies are staying private longer even as their valuations reach tens or potentially hundreds of billions of dollars.
That can create a liquidity challenge for early investors, employees and other shareholders whose positions have appreciated substantially but who lack the relatively simple exit mechanisms available in public markets.
At the same time, large institutional investors may want greater exposure to high-growth companies before an eventual IPO.
Donerail sees an opportunity to connect those two groups through a more institutionalized secondary market.
The firm argues that transactions of this size require considerably more than simply matching a buyer and seller.
Large private-company share transfers may involve issuer approvals, transfer restrictions, price discovery, settlement mechanics and other structural considerations that can make execution more complicated than a conventional public-market trade.
Donerail plans to apply an M&A-style process to those transactions.
That approach reflects the firm’s existing experience across principal investing, activist and constructivist situations, contentious take-private transactions and both buy-side and sell-side M&A advisory.
The private markets platform broadens that model into a part of the capital markets that Donerail believes remains fragmented despite the increasing value of companies operating within it.
The firm was founded in 2018 by William Wyatt and is headquartered in Los Angeles.
Donerail sees the new business as a natural extension of its strategy of operating in markets where existing capital structures may not fully meet the needs of sophisticated investors.
The rise of private-company secondary trading has become increasingly important as companies delay IPOs and employees and early investors seek liquidity before a public listing.
For institutional investors, secondary transactions can also provide access to highly sought-after companies when primary financing rounds are unavailable or limited.
Donerail intends to position its platform toward the largest and most complex end of that market, including transactions exceeding $1 billion.
KEY QUOTES:
“The center of gravity in the equity markets has moved.”
“The most important companies of this cycle are being valued at a scale that once required a public listing, and they are staying private far longer.”
“The market between those two groups remains fragmented and opaque. Bringing institutional discipline to it is a durable opportunity, and we could not be launching at a more interesting moment.”
William Wyatt, Founder and Managing Partner of The Donerail Group
“Private transactions of this size are not brokered, they are structured.”
“Price discovery, transfer mechanics, issuer consent and settlement have to be handled with the same rigor we apply to an M&A process.”
Andy Bowman, Partner at The Donerail Group and Head of M&A Execution
