10-Q: Forge Global to be Acquired by Schwab for $45/Share

Forge Global Holdings, Inc. announced its acquisition by The Charles Schwab Corporation for $45.00 per share in cash, alongside reporting a Q3 2025 net loss of $18.2 million.

Summary

• Forge Global Holdings, Inc. reported a net loss attributable to common stockholders of $18.223 million for the three months ended September 30, 2025, a slight improvement from $18.342 million in the prior year period.
• For the nine months ended September 30, 2025, the net loss attributable to common stockholders was $46.975 million, an improvement from $50.690 million in the same period of 2024.
• Total revenues, less transaction-based expenses, for Q3 2025 decreased by 24% quarter-over-quarter to $20.972 million, primarily due to a 35% decrease in marketplace revenue.
• Year-to-date total revenues, less transaction-based expenses, increased by 22% to $73.660 million for the nine months ended September 30, 2025, driven by a 62% increase in marketplace revenue volume.
• Custodial administration fees decreased by 13% year-over-year for the nine-month period, attributed to lower interest rates and a 3% decline in custodial client cash balances.
• The company completed the acquisition of Accuidity, LLC on July 1, 2025, for $10.0 million in cash and 1,150,000 shares of common stock, with potential earn-out consideration of up to 1,000,000 additional shares.
• On November 5, 2025, Forge entered into a definitive merger agreement to be acquired by The Charles Schwab Corporation for $45.00 per share in cash, with the transaction expected to close in the first half of 2026.
• Cash and cash equivalents significantly decreased to $32.294 million as of September 30, 2025, from $105.140 million at December 31, 2024.
• A material weakness in internal control over financial reporting persists as of September 30, 2025, despite ongoing remediation efforts.

Sentiment

Score: 7

Explanation: While the company reported continued losses and a significant quarter-over-quarter revenue decline, the announced merger with The Charles Schwab Corporation at a fixed cash price of $45.00 per share provides a substantial and certain positive outcome for shareholders, indicating a strong strategic exit.

Positives

• The announced merger agreement with The Charles Schwab Corporation for $45.00 per share in cash provides a significant and certain premium for shareholders.
• Net loss attributable to Forge Global Holdings, Inc. improved year-over-year for both the three-month ($18.223 million vs. $18.342 million) and nine-month ($46.975 million vs. $50.690 million) periods.
• Year-to-date total revenues, less transaction-based expenses, increased by $13.3 million (22%) compared to the prior year, driven by a substantial 62% increase in marketplace revenue volume.
• The acquisition of Accuidity, LLC expands Forge's private market investment access and capabilities, enhancing its strategic position.
• The company's share repurchase program, with approximately $5.9 million remaining, indicates management's confidence in the company's value.

Negatives

• Total revenues, less transaction-based expenses, decreased by $6.6 million (24%) quarter-over-quarter, primarily due to a 35% decrease in marketplace revenue.
• Marketplace trading volume experienced a 44% decrease quarter-over-quarter, attributed to seasonal investment behavior.
• Custodial administration fees decreased by $4.3 million (13%) year-over-year for the nine-month period, impacted by lower interest rates and a decline in custodial client cash balances.
• Cash and cash equivalents saw a significant decline from $105.140 million at December 31, 2024, to $32.294 million at September 30, 2025.
• The company continues to report operating losses, with Q3 2025 operating loss at $20.549 million.
• A material weakness in internal control over financial reporting remains un-remediated as of September 30, 2025.
• A loss contingency of $1.2 million was recognized for noncancelable service contracts no longer required.

Risks

• Market reaction to the announcement and pendency of the merger with The Charles Schwab Corporation.
• Uncertainty regarding the satisfaction of closing conditions for the Schwab merger, including regulatory and stockholder approvals.
• The fixed merger consideration of $45.00 per share will not increase for any positive changes in Forge's business during the merger's pendency.
• Potential adverse effects on relationships with customers, suppliers, and business partners due to merger uncertainties.
• Risk of litigation related to the proposed merger, which could delay or prevent completion or result in damages.
• Incurrence of significant non-recurring transaction costs related to the merger, which may not be recovered if the merger is not completed.
• Potential obligation to pay a termination fee of $25.74 million to Schwab under certain circumstances if the merger agreement is terminated.
• If the merger is not completed, alternative strategic transactions may be less favorable or unobtainable.
• Business uncertainties and contractual restrictions during the merger's pendency could limit the company's ability to respond to competitive pressures or business opportunities.
• General macroeconomic and business conditions, including interest rate environment, volatility, and liquidity risks to private equity valuations.
• Ability to effectively execute business strategy and monetize services.
• Uncertainties inherent in the development of new business lines, strategies, products, and services.
• Rapid technological changes and competitive threats in the private markets.
• Ability to attract, train, and retain effective officers, employees, directors, and other key personnel.
• Managing cybersecurity and technology risk management processes.
• Maintaining the listing of securities on the NYSE or another national securities exchange.
• Impact of new accounting standards and tax laws.
• Concentration of credit risks in cash, investments, and accounts receivable.
• Reliance on management estimates and assumptions in financial reporting, particularly for fair value measurements and goodwill impairment.

Future Outlook

The merger with The Charles Schwab Corporation is expected to close in the first half of 2026, subject to customary closing conditions, including stockholder and regulatory approvals. The company believes existing cash balances will be sufficient to fund merger-related costs and ongoing operating requirements through the closing date. Future equity and financing requirements will depend on growth rate, platform development spending, and sales and marketing expansion, potentially requiring additional capital. The company is evaluating the impact of new accounting standards (ASU 2025-06 and ASU 2024-03) and the recently enacted 'One Big Beautiful Bill Act' (OBBBA) on its financial statements.

Management Comments

• Believe existing liquidity as of September 30, 2025, will be sufficient to meet operating working capital and capital expenditure requirements for the next twelve months and the foreseeable future.
• Existing cash balances will be sufficient to fund merger-related costs and ongoing operating requirements through the closing date.
• Intend to continue investments in product development, sales efforts, and additional general and administrative costs associated with operating as a public company.
• Expect to maintain financing flexibility in current market conditions and may require additional capital resources for strategic growth initiatives.
• Focused on aligning headcount with current business needs.

Industry Context

Forge Global operates in the private markets, aiming to democratize access through its technology-driven platform. The acquisition of Accuidity LLC is a strategic move to expand private market investment access by combining investment strategies and sourcing networks with Forge's data, technology, and distribution. The announced merger with The Charles Schwab Corporation is positioned to redefine private market access by integrating Schwab's industry-leading wealth, advisory, and investment management solutions with Forge's capabilities. The company's performance is influenced by broader private market trends, consumer behavior, and the macroeconomic environment, including interest rates and liquidity risks, which impact both marketplace activity and custodial administration fees.

Comparison to Industry Standards

• The filing references 'Class A office buildings of comparable quality in the San Francisco financial district area' for assessing certain operating expenses and trade name valuation, but does not provide specific financial performance comparisons to these benchmarks.
• The merger with The Charles Schwab Corporation is framed as combining 'Schwab's industry-leading suite of wealth, advisory and investment management solutions with the Company's ability to offer direct and indirect opportunities to participate in the private markets to redefine private market access,' implying Schwab's leadership but not offering a direct comparison of Forge's current results against specific industry leaders or global benchmarks.

Corporate Governance

Legal Proceedings

• The company is subject to claims and lawsuits in the ordinary course of business, including arbitration, class actions, and other litigation, some with claims for substantial or unspecified damages.
• The company may be subject to inquiries, investigations, and proceedings by regulatory and other governmental agencies.
• Current other claims relate to employee-related matters, with unpredictable outcomes, but potential liabilities are not expected to have a material impact.
• In May 2025, the company resolved a self-identified informational filing matter with the Internal Revenue Service and paid an immaterial compliance fee.
• Litigation relating to the proposed merger with Schwab may be filed in the future, which could prevent or delay completion or result in damages.

Related Party Transactions

• Forge Europe GmbH, a fully consolidated subsidiary, was formed with Deutsche Börse Aktiengesellschaft (DBAG), a stockholder of the company, on September 7, 2022.
• Forge Global Advisors LLC (FGA), a wholly-owned subsidiary, advises Single Asset Funds (SAFs) but does not consolidate them, as the company has no direct or indirect interest in the SAFs.
• Accuidity LLC, a wholly-owned subsidiary, manages funds organized as series SPVs of Accuidity Fund LP and Accuidity Venture LLC, but does not consolidate these funds.
• Certain members of senior management hold approximately 50% ownership interests in a fund managed by the company; fees earned were not material.
• A family member of a former executive officer is a portfolio manager for investment funds that engage in secondary transactions with the company, resulting in commissions of $0.1 million for Q3 2025 and $0.3 million for the nine months ended September 30, 2025.
• The company holds a 25.2% equity method investment in EQUIAM, LLC, which engages in secondary transactions with the company. Forge invested $0.5 million in an unsecured convertible note and warrant offering by Equiam on May 2, 2024, with a carrying value of $0.2 million as of September 30, 2025.

Stakeholder Impact

• Shareholders: The announced acquisition by The Charles Schwab Corporation at $45.00 per share in cash provides a significant and certain positive outcome, assuming the merger closes.
• Employees: Potential for retention challenges due to merger uncertainty; equity awards will be converted to Schwab restricted stock units or shares, maintaining continuity of incentives.
• Customers: Potential for adverse effects on relationships due to merger uncertainties, but also the prospect of enhanced private market access through integration with Schwab's offerings.
• Suppliers and Partners: May experience adverse effects on relationships due to uncertainties surrounding the merger.
• Creditors: The company believes existing cash balances are sufficient to fund operations through the merger's closing, and the acquisition by Schwab provides a clear future for the company's financial obligations.

Next Steps

• Obtain stockholder approval for the merger with The Charles Schwab Corporation.
• Obtain necessary regulatory approvals for the Schwab merger.
• Satisfy other customary closing conditions for the Schwab merger.
• Complete the merger with Schwab in the first half of 2026.
• Continue to operate independently until the Schwab transaction closes.
• Implement and test remediated processes, procedures, and controls to address the material weakness in internal control over financial reporting.
• Evaluate the impacts of new accounting standards ASU 2025-06 and ASU 2024-03.
• Assess elections and impact of the 'One Big Beautiful Bill Act' (OBBBA) on federal net operating loss deferred tax assets, results of operations, and cash flows.

Key Dates

Recommendation

The definitive agreement for The Charles Schwab Corporation to acquire Forge Global for $45.00 per share in cash represents a substantial and certain premium for shareholders. Assuming the current market price is below $45.00, this offers a compelling arbitrage opportunity with a clear exit price. While the company's standalone financial performance shows continued losses and recent revenue declines, the acquisition by a major financial institution significantly de-risks the investment and provides a strong, fixed return for shareholders upon closing, which is expected in the first half of 2026.

Keywords

Private markets, Charles Schwab, Acquisition, Merger, SEC filing, 10-Q, Financial services, Fintech, Marketplace revenue, Custodial administration fees, Net loss, Corporate governance, Risk management, Accuidity, FRGE