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37

No, private companies have no obligation to help you sell their shares. It may not be legal, but there is very little you can do short of suing the company. Great article about this from the Wall Street Journal here. You could approach the company and ask if they are interested in buying back shares, or if they know anybody who is interested in buying. But ...


24

The company going public is probably your best chance of being able to sell your shares. Therefore, your first job should probably be to try and see if there are any indicators that this might still happen: scour their website and financial news websites for anything that might indicate that this is still a possibility. If you do still have contacts within ...


16

ISOs (incentive stock options) can be closed out in a cashless transaction. Say the first round vests, 25,000 shares. The stock is worth $7 but your option is to buy at $5 as you say. The broker executes and sells, you get $50,000, with no up front money. Edit based on comment below - you know they vest over 4 years, but how long before they expire? It ...


15

Advantages Long-term capital gains tax rates. If your company has a liquidity event, if it's been at least a year since you exercised your options, it will be considered a long-term capital gain and your tax rate will be lower. Note that it's entirely possible that you will have no choice but to receive cash for your shares, so it's not like you can just ...


13

This is several questions wrapped together: How can I diplomatically see the company's financial information? How strong a claim does a stockholder or warrantholder have to see the company's financials? What information do I need to know about the company financials before deciding to buy in? I'll start with the easier second question (which is quasi ...


11

This is an old question that has an accepted answer, but it has gotten bumped due to an edit and the answers given are incorrect. I am assuming this means that every other Friday, the company is going into the open public market, buying those shares and then giving it out to the employees. No. Companies will internally hold shares that it intends to ...


9

There are two things to consider: taxes - beneficial treatment for long-term holding, and for ESPP's you can get lower taxes on higher earnings. Also, depending on local laws, some share schemes allow one to avoid some or all on the income tax. For example, in the UK £2000 in shares is treated differently to 2000 in cash vesting - restricted stocks or ...


9

In general, shares in a private company aren't worth anything. (Unless the company is paying dividends or they give voting privileges or something.) There's no good way to convert them into cash unless the company is buying.


8

Many companies actually just issue new shares for employee compensation instead of buying back existing ones. So actually, the share price should go down because the same value is now diluted over more shares. In addition, this would not necessarily affect companies with many employees than those with fewer employees because companies with more employees ...


7

An option without the vesting period and the price at which one can exercise the option is of not much value. If vesting is determined by board, then at any given point in time they can change the vesting period to say 3, 5, 10 years any number. The other aspect is at what price you are allowed to exercise the option, ie if the stock is of value 10, you ...


7

Scenario 1 Only your company can tell you if you can still exercise the options, and under what terms. Part of the agreement to sell a company includes dealing with the employee's benefits and options. Since the company that gave you the options no longer exists - there's no default answer, you should check your specific situation. In many cases, in this ...


7

You can borrow money from an individual and pay him interest with a simple agreement. A friend or relative might offer a low rate, a stranger, a far higher rate. Either might ask for a portion of the profits. This all depends on how much the options are in the money. Say you were my sibling. You want $25K, and I'm happy to help, but if the options are not ...


7

This is called "same-day sale". If your company is publicly traded it is definitely doable through your broker. If your company is private, you'll have to ask them if it is possible, and if it is - how the process works. Re taxes, hard to tell since you didn't mention what country you're from. But generally, in all the tax jurisdictions I know of (which is ...


7

A little terminology: Grant: you get a "gift" with strings attached. "Grant" refers to the plan (legal contract) under which you get the stock options. Vesting: these are the strings attached to the grant. As long as you're employed by the company, your options will vest every quarter, proportionally. You'll become an owner of 4687 or 4688 options every ...


7

"Cashing in" means converting to cash; selling his shares. The wrinkle is that he didn't actually have the shares at the time he wanted to sell them, only vested share options that he had been given as part of his pay. Therefore what he did was exercised his options to buy the shares and then sold them for cash. He may well have done this a slightly less ...


6

ESPP tax treatment is complicated. If you received a discount on the purchase of your stock, that discount is taxable as ordinary income when you sell the stock. Any profit about the market value when the stock was purchased is taxed based upon the holding period of the stock. If you have held the stock less than a year, the profit is taxed at your ...


5

You should ask the company, there's no one rule. From my observations, what usually happens is that the old options are replaced with the new options in the new company, and with a new vesting schedule. But that doesn't have to be like that, the old options may be cancelled, bought out, replaced with the stocks of the new company, etc etc. It depends on the ...


5

Your maximum risk is 100%. If you buy the stock 15% off and your company goes bankrupt tomorrow, you've lost everything. It also sounds like you have foreign exchange risk. One can debate how much risk this is in terms of expected outcomes, but that was not your question. However, if you purchase the company stock and buy put options at the same time, ...


5

Let's take an example: IBM has about 430,000 employees worldwide. Assume the average yearly salary is $80K (it's probably less, since a lot of jobs are offshore). If every employee took 10% of their pay as stock, that's $132 million every two weeks. But IBM's market capitalization is about $153 billion, so stock purchases would be less than 0.1% of that.


5

This is a tax, not a deposit. So no, you will not get it back. You will be able to use your AMT credit, under certain conditions, see the instructions to form 8801. Obviously, the actual value of the credit depends on your other items of income, and you may end up never using the whole credit.


5

Restricted Stock Units are different from stock options because instead of buying them at a particular strike price, you receive the actual shares of stock. They are taxed as ordinary income at the time that the restriction is lifted (you don't have to sell them to be taxed). Usually, you can choose to have a percentage of the stock withheld to cover tax ...


5

In your comment you note that your company is not yet listed. This is important. So, what are stock options worth? Let's give some scenarios: 1: The company becomes public, and starts selling shares to anyone who asks. The stock reaches a certain price higher than the option price, and you use your stock options to get a nice payday. 2: The company gets ...


4

That's a tricky question and you should consult a tax professional that specializes on taxation of non-resident aliens and foreign expats. You should also consider the provisions of the tax treaty, if your country has one with the US. I would suggest you not to seek a "free advice" on internet forums, as the costs of making a mistake may be hefty. Generally,...


4

The typical deal is you can put 10% of your gross pay into the ESPP. The purchase will occur on the last deposit date, usually a 6 month period, at a 15% discount to the market price. So, the math is something like this: Your return if sold the day it's purchased is not 15%, it's 100/85 or 17.6%. Minor nitpick on my part, I suppose. Also the return is not ...


4

First, you mentioned your brother-in-law has "$100,000 in stock options (fully vested)". Do you mean his exercise cost would be $100,000, i.e. what he'd need to pay to buy the shares? If so, then what might be the estimated value of the shares acquired? Options having vested doesn't necessarily mean they possess value, merely that they may be exercised. Or ...


4

I think you're not applying the right time scale here. ESPP (Employee Stock Purchase Plan) is usually vesting every 6 months. So every half a year you receive a chunk of stocks based on your salary deduction, with the 15% discount. Every half a year you have a chunk of money from the sale of these stocks that you're going to put into your long term ...


4

Consult a qualified tax professional. I trust that's what the "silicon valley types" did ... at least those who still have most of their money left. When you speak to a professional, I would expect a couple of things you'd be made aware of about such a situation in Canada are: You might qualify for a lifetime capital gains exemption. If you are selling ...


4

Full disclosure: I’m an intern for EquityZen, so I’m familiar with this space but can speak with the most accuracy about EquityZen. Observations about other players in the space are my own. The employee liquidity landscape is evolving. EquityZen and Equidate help shareholders (employees, ex-employees, etc.) in private companies get liquidity for shares they ...


4

Stuff I wish I had known, based on having done the following: Obtained employment at a startup that grants Incentive Stock Options (ISOs); Early-exercised a portion of my options when fair market value was very close to my strike price to minimize AMT; made a section 83b) election and paid my AMT up front for that tax year. All this (the exercise and the ...


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