We’re hearing from several sources that a secondary financing round is in the works for GitHub, following its last $250 million financing round that valued it at $2 billion in July last year. However, there’s a little bit of interesting chatter beyond that they’re raising a secondary for potential liquidation of investors or employees, we hear.

There are two parts to the story: first, this secondary round may value the company below the $2 billion valuation from its previous round. One source estimated the range could even be around $1.5 billion, though we couldn’t pin down the exact number. However, another source tells us that this secondary is likely for common stock, which could complicate the matter a bit. It’s hard to tell exactly where preferences lie and what rights investors got, so the valuation calculation can get a little fuzzy here — and it may not, in the end, technically be a down round in the traditional sense.

But perhaps the more interesting one is that a rumor is flying around that Microsoft is sniffing around the company. We aren’t sure if it’s related to an acquisition or potentially a strategic investment (talks around one may inevitably lead to the other), or it could be that the companies may be exploring a deeper partnership. A representative from GitHub said there’s no truth to the Microsoft acquisition rumors, though declined to comment on the rest of the story. A representative from Microsoft declined to comment.

We weren’t able to learn who would be able to participate in this secondary round — whether it would be investors or employees. But either way, given that GitHub is an eight-year-old company, the liquidation event shouldn’t be super surprising.

Secondary rounds like this can be important as companies grow into later stages but look to put off IPOs. Given GitHub’s highly distributed workforce and culture, it’s not surprising that earlier employees might be looking for some kind of compensation for their extended tenure as new candidates enter into the the organization, which traditionally is known for having a flat structure. It could also help with retention. Investors, too, looking for liquidity may find themselves sated for a while with a secondary round.

GitHub is probably one of the most widely-adopted developer tools in the world — serving as a go-to resource for not only managing code repositories, but also a vital part of the whole open source ecosystem. Keeping those open-source projects healthy and active is a pivotal tool for larger companies, which can use contributors as a farm system for their developer teams and also pick off interesting ideas that pop up from those communities. But like any light-touch resource for traditional developers, the company needs to expand into enterprises if it’s going to grow into a fully sustainable business. That’s going to be incredibly challenging.

Speaking of Microsoft — they also have GitHub-like tools within Visual Studio Team Services, so perhaps that’s where the chatter about the company checking in with GitHub is coming from.

GitHub also faces increasing competition, including from the likes of recently-IPO’d Atlassian. Last year, following its IPO, the company immediately jumped 32% on its first day of trading and valued it at $5.8 billion. That was largely on the strength of the company actually being profitable when it went public. There’s also the recently-emerging GitLab, which is based on open-source Git tools, that raised $20 million just last month.

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