In a direct listing, a company's outstanding shares are listed on a stock exchange without a primary or secondary underwritten offering. Existing security holders become free to sell shares on the stock exchange at market-based prices. Since there is no underwritten offering, a direct listing does not require the participation of investment banks acting as underwriters. This means that certain features that are typical of a traditional initial public offering - such as lockup agreements and price stabilization activities - are not present in a direct listing. This article explores certain characteristics and roles involved in this approach to becoming a public company, and incorporates insights from the Spotify and Slack direct listings, which Latham & Watkins worked on and were completed in April of 2018 and June of 2019, respectively.

Originally published in Bloomberg Law - October 2019.