What Companies Should Know Before Allowing Secondary Sales?

Companies who want to give their employees the opportunity to sell their shares should consider the following:

Set specific timeframes to allow for stock sales by the employees.

This limits the distraction of employees and reduces the amount of disclosure the company must do.

Prepare disclosure statements for the employees to use and gain board approval.

Many companies set the selling timeframe to come just after a fundraise.

The share price has been set and can be used for the secondary transaction.

The company should provide standard disclosure information about the company such as risk factors and current financials.

Company-made projections are rarely provided as it’s very difficult to make accurate predictions.

The price set for the secondary sale will impact the next 409A valuation that sets the price of stock options.

The secondary sale price sets a floor for the options price.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

---

Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org  

Check out our other podcasts here: https://investorconnect.org/ 
For Investors check out: https://tencapital.group/investor-landing/ 
For Startups check out: https://tencapital.group/company-landing/ 
For eGuides check out: https://tencapital.group/education/ 
For upcoming Events, check out https://tencapital.group/events/  

For Feedback please contact info@tencapital.group   

Please follow, share, and leave a review.

Music courtesy of Bensound.

Copyright (c) 2024, Hall Martin and investorconnect.org. All rights reserved.

Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.