) -- There has been endless analysis about what the



IPO means for the company itself and for other tech companies that have yet to conduct IPOs.

There's one area that's been ignored, though, and that is the private market exchanges that now exist for buying and selling private company shares pre-IPO. There are two such exchanges: SecondMarket and SharesPost.

Interest in and media coverage of these exchanges has grown over the past year, as higher-valuation transactions began to occur involving Facebook, Twitter, Zynga, Groupon and LinkedIn.

It became possible for institutional and individual investors within the last couple of years to buy into these private firms' shares before they went public. For employees at these firms looking to sell, these new markets gave them liquidity for their shares.

But as increasingly higher valuations began to be awarded on these markets to Facebook and Twitter, the mainstream media began to speak of them disapprovingly. Some wondered whether the exchanges were helping to fuel the higher valuations being paid for these companies.

I remember a commentator saying on TV a few months back, "You know you can't sell on these exchanges, you can only buy." Well, that's not true. There couldn't be a market if there wasn't a seller as well as a buyer.


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Securities and Exchange Commission

even announced a few weeks back that it was looking into these exchanges. Into what exactly, it's not clear. And there haven't been any updates on that investigation since.

However, last Thursday, I was on TV with someone from SecondMarket, discussing the LinkedIn IPO. He was asked what LinkedIn had recently traded at on his market pre-IPO. "$35," he replied, "about a week ago."

I'm not here to defend LinkedIn's pricing. I think it's wildly overvalued here and would be an attractive buy at $20 to $25. (Shares recently changed hands around $88.)

But I do think it's interesting that LinkedIn was actually underpriced on the private market exchange, compared to what it's fetching in the public markets.

And so what does this say about Facebook? I think it suggests that when Facebook goes public (which looks like it will happen this fall) the stock will probably trade for much more than its recent private market valuations.

Facebook recently changed hands at around $85 billion privately. When it does go public, I suspect it will trade for around $120 billion.

At the time of publication, Jackson had no positions in companies mentioned


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Eric Jackson is founder and president of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd. You can follow Jackson on Twitter at or @ericjackson