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Has any HNer participated in such a secondary sale? I think it could be informative to describe the experience, whom you dealt with, how a price was agreed upon

by dpflan 11y ago

Has any HNer participated in such a secondary sale? I think it could be informative to describe the experience, whom you dealt with, how a price was agreed upon, how your company discussed secondary sales, etc.

throw2192015 11y ago
I have participated as a seller. I offered some of my exercised options for sale on SharesPost [1]. The SharesPost representative contacted me; she said that she had a potential buyer interested, but the bid was slightly lower than my initial ask and the volume they wanted to buy was a little lower than what I had offered to sell initially. We agreed on the deal. I filled out some paperwork and sent proof that I was a legitimate seller. SharesPost representative got in touch with my employer. My employer had the right to first refusal which they waived. The process took few weeks with escrow etc, but was smooth. SharesPost charged me a %ge fee. I also had to pay for the escrow service. [1]: http://sharespost.com/ http://sharespost.com/
- dpflan 11y ago
  Thanks for sharing this. The process does sound straight forward. It seems that you still retained some shares. Did you exercise with the intention of selling a portion on the secondary market?
  - throw2192015 11y ago
    I used some of my savings and a cash bonus I got at work to exercise some of my options. I held on to that stock for a year. The next year I sold a portion of that stock in the transaction described above. I used the proceeds from the sale to replenish my savings, which had taken a small hit due to the AMT from the previous tax year.
- shostack 11y ago
  How did things work out from a tax perspective if you don't mind my asking? Also, what sort of communication did you have with your company before/during this transaction regarding it? Is this the kind of thing employers might freak out about if they are blindsided by the request?
  - throw2192015 11y ago
    > How did things work out from a tax perspective if you don't mind my asking? The proceeds I got from the sale were treated as long-term capital gains. I got a 1099-B from SharesPost. > Also, what sort of communication did you have with your company before/during this transaction regarding it? I mentioned my desire to sell some of my stock to my manager. I was directed to speak to the head of legal department. Here is what I learned that person. The company could not provide me with a buyer, or advice me to sell/hold etc. But once I found a buyer, the company was bound to agree to that sale or direct me to another buyer who was offering at least the same price.
- kbenson 11y ago
  Offtopic: Assuming your account is a throwaway you just created so as not to reveal your selling history, and you based the name on some variation of "throwaway", the month, the date and the year.... then you used the wrong year. ;)
shriram_b02 11y ago
EquityZen (https://equityzen.com https://equityzen.com) has conducted several transactions in private companies, including many Unicorns, and charges only one fee (and no escrow fee).
- kornish 11y ago
  (full disclosure: Shriram is a cofounder of EquityZen).
gyardley 11y ago
I'd just keep your LinkedIn profile up to date with a clear indication that you might have an interesting amount of stock (co-founder, executive, early employee, etc.) and that you're no longer with the company. When secondary brokers have more buyers than sellers of a particular private stock, they come looking for you - and that's the time when you want to do your selling, not when people are freaking out and you're competing with others actively looking to unload their holdings.
- leroy_masochist 11y ago
  Understand how this could help you find a buyer, but if I were in this situation I'm not sure whether I'd want to put that on my LinkedIn profile.
  - gyardley 11y ago
    Putting your title or the fact that you were one of the first employees at a company on your LinkedIn profile is pretty common, no? Just to spell it out - that's the perfectly clear indication, not 'oh hi I have 125,000 shares of X to sell'.
    - leroy_masochist 11y ago
      That does make sense - I read your original comment a bit too literally.

by dpflan 11y ago

throw2192015 11y ago

I have participated as a seller. I offered some of my exercised options for sale on SharesPost [1]. The SharesPost representative contacted me; she said that she had a potential buyer interested, but the bid was slightly lower than my initial ask and the volume they wanted to buy was a little lower than what I had offered to sell initially. We agreed on the deal. I filled out some paperwork and sent proof that I was a legitimate seller. SharesPost representative got in touch with my employer. My employer had the right to first refusal which they waived. The process took few weeks with escrow etc, but was smooth. SharesPost charged me a %ge fee. I also had to pay for the escrow service. [1]: http://sharespost.com/ http://sharespost.com/

dpflan 11y ago
Thanks for sharing this. The process does sound straight forward. It seems that you still retained some shares. Did you exercise with the intention of selling a portion on the secondary market?
- throw2192015 11y ago
  I used some of my savings and a cash bonus I got at work to exercise some of my options. I held on to that stock for a year. The next year I sold a portion of that stock in the transaction described above. I used the proceeds from the sale to replenish my savings, which had taken a small hit due to the AMT from the previous tax year.
shostack 11y ago
How did things work out from a tax perspective if you don't mind my asking? Also, what sort of communication did you have with your company before/during this transaction regarding it? Is this the kind of thing employers might freak out about if they are blindsided by the request?
- throw2192015 11y ago
  > How did things work out from a tax perspective if you don't mind my asking? The proceeds I got from the sale were treated as long-term capital gains. I got a 1099-B from SharesPost. > Also, what sort of communication did you have with your company before/during this transaction regarding it? I mentioned my desire to sell some of my stock to my manager. I was directed to speak to the head of legal department. Here is what I learned that person. The company could not provide me with a buyer, or advice me to sell/hold etc. But once I found a buyer, the company was bound to agree to that sale or direct me to another buyer who was offering at least the same price.
kbenson 11y ago
Offtopic: Assuming your account is a throwaway you just created so as not to reveal your selling history, and you based the name on some variation of "throwaway", the month, the date and the year.... then you used the wrong year. ;)

shriram_b02 11y ago

EquityZen (https://equityzen.com https://equityzen.com) has conducted several transactions in private companies, including many Unicorns, and charges only one fee (and no escrow fee).

kornish 11y ago
(full disclosure: Shriram is a cofounder of EquityZen).

gyardley 11y ago

I'd just keep your LinkedIn profile up to date with a clear indication that you might have an interesting amount of stock (co-founder, executive, early employee, etc.) and that you're no longer with the company. When secondary brokers have more buyers than sellers of a particular private stock, they come looking for you - and that's the time when you want to do your selling, not when people are freaking out and you're competing with others actively looking to unload their holdings.

leroy_masochist 11y ago
Understand how this could help you find a buyer, but if I were in this situation I'm not sure whether I'd want to put that on my LinkedIn profile.
- gyardley 11y ago
  Putting your title or the fact that you were one of the first employees at a company on your LinkedIn profile is pretty common, no? Just to spell it out - that's the perfectly clear indication, not 'oh hi I have 125,000 shares of X to sell'.
  - leroy_masochist 11y ago
    That does make sense - I read your original comment a bit too literally.