What Is Your Stock Worth?

1501 Words7 Pages
What is your stock worth?

It is hard to value private company stock. A stock certificate is a piece of paper that entitles you to something of highly uncertain value, and could well be worthless in the future, or highly valuable, depending on the fate of the company. Generally, selling stock in a private company may be difficult, as the company is not listed on exchanges, and in any case, there may be restrictions on the stock imposed by the company. In startups, it is typical to hold the stock until the company is sold or becomes public in an IPO. A sale or IPO is often called an exit. Sales, dissolutions, and bankruptcy are sometimes called liquidations. In a few cases, you may be able to sell private company stock to another private party, such as an accredited investor who wants to become an investor in the company, but this is fairly rare. This is often called the secondary market. Sales generally require the agreement and cooperation of the company. For example, typically your shares would be subject to a right of first refusal in favor of the company (meaning, you couldn’t sell your shares to a third party without offering to sell it to the company first). Another possible roadblock is that private buyers may want internal company financials to establish the value of the stock, and this typically requires the cooperation of the company. There have been some efforts such as SharesPost, Equidate, and EquityZen to establish a market around such sales,

More about What Is Your Stock Worth?

Open Document