Music streaming company Spotify made waves this year when it opted to go public via direct listing, breaking from the traditional IPO route that many other tech companies have pursued.

It’s an unusual choice that experts said can boost shareholder liquidity and transparency if done right. Unlike an initial public offering, direct listings do not require the participation of underwriters, thus removing lock-up agreements and price stabilization activities and allowing existing shareholders to sell their shares immediately after listing at market prices.

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