History May Be Prologue On Snap-Like IPOs


Publish Date:
August 20, 2017
  • Marcus, David
The Street
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Snap Inc.’s (SNAP) initial public offering marked a turning point in investors’ attitude toward voting structures that vest control in a small group of insiders.

Shares the instant messaging company sold to the public in March carries no voting rights, while company founders Evan Spiegel and Bobby Murphy own stock giving them 88.5% of the vote and company executives have the rest.

Snap’s stiff-arm to public investors is only the latest episode in a long history that Andrew Winden chronicles in his new paper “Sunrise, Sunset: An Empirical and Theoretical Assessment of Dual-Class Stock Structures.” Winden, a former corporate partner at Morrison & Foerster LLP and a fellow at the Rock Center for Corporate Governance at Stanford Law School, surveys the voting arrangements that companies have used to ensure that founders continue to control a company after it goes public and – occasionally – to give minority stockholders a measure of oversight.

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