Why a Palantir IPO might not be far off screen shot 2016 06 24 at 3 22 04 pm

Earlier this week, Buzzfeed got its hands on a stock purchase offer arranged by Palantir for its employees, one that included asked current and former employees to agree to a host of stipulations. Among them, the 12-year-old, data analytics outfit asked former employees to renew their non-disclosure agreements, agree not to solicit Palantir employees for 12 months, and promise not to sue the company or its executives.

As part of the purchase plan, both current and former employees also had to agree to notify Palantir “immediately” if contacted by a reporter and to send the company a “copy of the inquiry” within three days.

Buzzfeed concluded that the arrangement was meant to “muzzle former employees,” which makes sense, particularly given insights into Palantir that Buzzfeed has been publishing this year. (It clearly has a friend or two who is close to the company.)

Still, we’d posit that something else could be going on. Namely, it looks to us like Palantir may be preparing at long last for an IPO.

Palantir, which has reportedly raised $2.3 billion from investors and was valued at $20 billion during its last institutional financing round, didn’t respond to a request for comment. But there are a few reasons to think the company, which has long rejected talk of going public, may finally be getting its ducks in a row.

For one thing, this recent liquidity event, in which Palantir agreed to buy up to $225 million in common stock from employees, offered those shareholders $7.40 per share. That’s a premium over the roughly $7 that outside buyers have been paying lately for employee shares on the secondary market. (As BuzzFeed noted, mutual fund Morgan Stanley and Fidelity had marked down the value of the shares even more dramatically, to just below $6 as of late March.)

Obviously, Palantir had to dangle some kind of carrot in exchange for the trade-offs it was asking. Indeed, founder Ben Black of Akkadian Ventures, which purchases stock in private companies, calls the deal “a massive benefit for their employees.”

But it also put itself in a somewhat fraught position if an IPO isn’t in the offing. Consider: If Palantir were instead to raise new funding any time soon at a substantially higher valuation, employees who just sold some of their shares might cry foul, saying Palantir was withholding knowledge of the fair value of the stock.

One could also argue that in arranging this stock purchase, Palantir was looking to clean up its cap table. Though this is the fifth buyback that Palantir has staged for its employees over the years, employees and investors have also been freely selling shares to secondary buyers; it’s apparently created a bit of market fatigue at this point. As says one source who asked not to be named, “Very few people have information about the company. They’re trading based on guesswork and speculation, and market is pretty volatile and maybe even artificially depressed by that lack of information.”

“Limiting the shares and pathways that employees can sell shares makes sense,” adds chief economist Max Wolff of the merchant bank Manhattan Venture Partners. “No firm wants too many shares on the market at one time to have a depressive impact on the perception of value.”

We’re just speculating, you might say. And you’re right. But even if we’re wrong about Palantir’s motivations, a quick scan of its job openings suggests that it’s finally starting to think seriously about an IPO. The 2,000-person company currently has eight openings in its finance department, including for an internal auditor who can “build a strong internal audit function that has the capabilities for SOX Compliance as well as business process optimization.”

Sarbanes-Oxley, of course, is the controversial 14-year-old act whose intent is to improve corporate governance and prevent fraudulent accounting activities at public companies.

Palantir seems well-positioned to test the public waters. Though sources tell us it isn’t yet profitable, the company reportedly saw revenue last year of $1.7 billion, roughly 60 percent of which came from commercial enterprises and another 40 percent from government contracts. Just last month, it landed a $222 million contract to support the United States Special Operations Command.

Presumably, through its share buyback, Palantir has also just locked up many current and former employees through a filing prospectus and even through a post IPO lock-up period. (At least, those who sold shares may perceive that they are locked up. As Cliff Palefsky, an employment rights attorney in San Francisco, notes, “Nonsolicits are used frequently.” But in California, at least, “they’re not enforceable in most cases.”)

Whatever happens, it’ll be interesting to see whether Palantir’s newest terms and conditions are embraced by companies elsewhere.

“I wouldn’t be surprised if you start seeing more stipulations relating to company buybacks and tender offers,” says Shriram Bhashyam, who founded EquityZen, a startup the connects shareholders of private companies with investors. “Many of these companies have the same counsel and board members, so a lot of information and practices get passed around.”

Certainly, more creative solutions to keep the peace may come in handy in this market, where 60 percent fewer companies have gone public this year than last year (and just one venture-backed “unicorn” has made it out).

Howard Caro, a managing director at the investment firm Scenic Advisement, puts it even more more delicately.“With large, successful, private technology companies staying private longer, executives and boards are realizing that they have to respond constructively to the inevitable build up of demand for pre-IPO liquidity

[from] not only their employee bases but also from early investors.”

What “constructively” means for each company and their employees will be worth watching.

Photo of Palantir CEO Alex Karp by David Paul Morris for Getty.