Jay Yarow/Business Insider
Jack Dorsey's payments startup Square is talking to investors about raising a new round of financing at a $5 billion valuation , Jessica Lessin and Eric Newcomer of The Information report .
Lessin and Newcomer say the company would use the money to buy stock from some of its employees.
The news may signal a change in plans for Square.
In November, The Wall Street Journal's Douglas MacMillan reported that Square was talking with Goldman Sachs and Morgan Stanley about a 2014 IPO.
MacMillan said Square's 2014 revenues could approach $1 billion, up from $550 million this year.
It's possible that Square could do a final late stage round in the next couple months and an IPO in 2014.
But again, Lessin and Newcomer say the point of the $5 billion round would be to allow insiders to sell their stock.
Why would insiders want to do that instead of waiting for an IPO?
They wouldn't – unless they think there's a chance Square might IPO at a valuation less than $5 billion.
So what's going on?
Don't know! But let's speculate.
Maybe Dorsey suddenly doesn't feel like Square is ready for an IPO.
M aybe Dorsey took a look at taking Square public and decided no thanks.
The only reason for a company to go public is to get employees and investors liquidity and to have liquid stock to use for acquisitions.
Otherwise, being public is a big pain. You have to spend a lot of your time kissing-up to big shareholders who control your fate – shareholders who have your number on speed-dial.
This $5 billion round would take of liquidity for Square. And maybe Dorsey doesn't feel like Square has any big acquisitions ahead of it. So why go public ever?
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