In some instances, both private and public companies may issue shares to their own employees as part of a compensation program. This action is designed to motivate employees by tying a portion of their earnings to the company's earnings. In some cases, people may eventually want to sell their shares. For publicly traded shares, this process is simple: Private shares, on the other hand, cannot be sold as easily.
Because private shares represent a stake in a company that is not listed on any exchange, finding a buyer may be difficult. The lack of information about most private companies tends to dissuade investors, who are usually very reluctant to buy into a company that they know nothing about. The simplest solution for selling private stocks is to approach the issuing company and to inquire about what other investors did to liquidate their stakes.
Some private companies may have buyback programs, which allow investors to sell their shares back to the issuing company. Private companies may also be able to provide leads about current shareholders or new investors who have expressed interest in buying the company's shares. After an investor manages to find a buyer for the stocks, it is suggested that he or she visit a securities lawyer in order to finish off the paperwork because although private stocks are not registered with the Securities and Exchange Commission SEC , all SEC regulations involving selling stocks must still be followed.
Failure to comply with all relevant regulations may result in civil, administrative or even criminal penalties. To learn more, read What's the difference between publicly- and privately-held companies? Dictionary Term Of The Day.
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A celebration of the most influential advisors and their contributions to critical conversations on finance. Become a day trader. How can I sell private company stock? By Albert Phung Share. The most recognized transition between the private and public markets is an initial public offering IPO.
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You may be familiar with publicly-traded companies, but how much do you know about privately-held firms? The gross valuations over the past five years are more indicative of the market than the true value of the company itself.
Privatization can give management more time to make money for investors, but at what cost? A transaction or a series of transactions that convert a publicly When a private equity firm takes a public firm private by purchasing A conflict of interest inherent in any relationship where one party is expected to act in another's best interests.
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