How to Sell Private Company Stock and Employee Stock Options

Over the past decade, it's become increasingly common for startups to offer equity as part of employee compensation — typically in the form of stock options or restricted stock units (RSUs).

This way, they can recruit top talent without burning tons of cash.

But while earning stock in the company you work for is a great perk, it's rarely liquid. Even at successful companies, employees often wait years — sometimes a decade or more — before they can turn that equity into cash through an IPO or acquisition.

In reality, stock options often feel more like lottery tickets than actual cash. It's not uncommon for stock units that once held six- or seven-figure value to become worthless in a matter of months.

Fortunately for you, buyback programs, secondary marketplaces, and other liquidity options have made it possible to sell private company stock before an IPO. But each of those mechanisms comes with its own set of rules, restrictions, and tradeoffs.

Here's everything you need to know about how to sell your private company stock and stock options.

How to sell shares of a private company

There are two main ways to sell private company stock: through company-organized liquidity events or on secondary marketplaces.

In general, the bigger and more well-known your company is, the more options you'll have and the easier it will be to find buyers.

1. Company-organized liquidity events

The most straightforward way to sell your shares is through a company-organized event — typically a tender offer, buyback program, or IPO.*

*These events aren't super common — and if one is happening, you'll probably know about it. Still, it's worth double-checking. Company-led programs are usually the fastest, easiest, and most cost-effective way to sell your shares.

Tender offer

A tender offer is when outside investors — typically private equity firms or venture capital funds — offer to buy shares directly from existing shareholders. 

The company facilitates the process by bringing in the buyer, setting the valuation and price per share, and presenting the offer to employees and early investors.

It's a way for the company to provide liquidity to employees and early investors without raising unnecessary capital or diluting the existing cap table.

Tender offers don't happen often, and they're not something you should count on if you're actively looking to sell. They tend to occur at late-stage, highly sought-after companies where investor demand is strong.

Even when one is available, there's no guarantee you'll be able to participate.

Many tender offers are oversubscribed, meaning more people want to sell than the buyer has budget for, in which case the company will prioritize certain shareholders over others.

Buyback program

The easiest way to turn your equity into cash is to sell your shares back to the company itself. This is known as a buyback — or repurchase — program.

Unlike tender offers, there's no outside investor involved. The company uses its own cash to buy back shares from employees and early investors. That makes the process even simpler and cleaner from a transaction standpoint.

Some companies run ongoing buyback programs, while others open short selling windows once a year or once per quarter.

But, in either case, buybacks are relatively rare. Most private companies simply don't have the cash on hand to fund them, which is why they offered stock options instead of cash compensation in the first place.

Still, if your company is late-stage and/or already profitable, it's worth checking whether a buyback program exists or might be offered in the future.

Initial public offering (IPO)

Historically, the most common path to liquidity was waiting for your company to go public. Once that happens, your private shares convert into publicly tradable stock, and you'll realize the value of your equity.

After the IPO, your shares become just like any other stock you own, though you'll likely be subject to a 90–180 day lock-up period before you can sell.

While the upside of an IPO can be massive — especially if you joined early — it's a rare outcome. Only a small fraction of private companies ever grow large or profitable enough to go public.

If your company is on the IPO track, that's great news. But if you're relying on that outcome to cash out, you're essentially betting that everything goes right. For many people, it's smarter to look for partial liquidity and lock in some gains along the way.

2. Secondary marketplaces

Company-led liquidity events — like tender offers, buybacks, and IPOs — are by far the cleanest and easiest ways to sell your private shares. But they're also infrequent, and most employees will go years, if ever, without seeing a single one.

That's where secondary marketplaces come in.

Platforms like Hiive, Forge, Linqto, and EquityZen connect shareholders looking to sell with accredited investors looking to buy.

	Hiive	Forge	Linqto	EquityZen
Rating
Strength(s)	Best pricing Good liquidity Transparency	Good pricing Good liquidity	Fastest transactions	Long-standing network
All-in fees	3–5%*	2–4%*	10–20%**	3–5%*
Links	Learn more	Learn more	Learn more	Learn more

*Transaction fee upon successful sale only.

**Small transaction fee upon successful sale; high cost embedded in a below-market offer.

Unlike company-run events, these marketplaces operate year-round and provide more flexibility in terms of timing. If you're looking for liquidity and your company isn't offering a formal program, this is often your best alternative.

That said, secondary sales are more complex and take more time.

Once you've agreed on a deal with a buyer, the platform will contact your company to request approval, often triggering a Right of First Refusal (ROFR) review and internal legal checks.

The company can approve the sale, match the offer itself, or block it entirely (though outright denials are becoming less common). Transactions often take weeks to close.

Still, if you're sitting on valuable equity and want to turn it into cash, secondary marketplaces are likely your best option.

Hiive and Forge have the best pricing, liquidity, and transparency.

If you're looking to sell, sign up for both platforms and check whether others at your company have listed shares or completed recent transactions.

You can also compare bids side-by-side to see which platform offers better terms for your specific shares.

What to consider before selling private company stock

Selling your private company shares is a big decision with a number of moving parts.

Here are five key factors to consider before moving forward.

1. Your company's policies around selling shares

Before you can sell your private shares, you'll need approval from your company.

Obviously, if you're participating in a company-organized tender offer or buyback program, that won't be an issue. You'll just need to make sure you follow the process and deadlines outlined in the offer.

You can also ask your HR team, CFO, or founder if a buyback program or tender offer is in the works. If one is coming up, you'll receive the terms in writing and be given at least 20 business days to review the offer before making a decision.

If you want to sell your shares on a secondary marketplace, that's where company approval becomes more important.

Most private companies have a Right of First Refusal (ROFR), giving them the option to buy back your shares — on the same terms you've negotiated with an outside buyer — before the sale can go through.

In some cases, companies can also block secondary sales outright, though that's becoming less common.

To understand what's allowed, review the documents tied to your equity grant — such as your stock option agreement, RSU plan, or shareholder agreement. These will outline any restrictions, approval processes, and timelines.

2. Your financial situation

Once you understand what your company allows, the next step is to think about your own financial goals.

If you need cash in the near term — to pay off student loans, buy a home, or cover other major expenses — it may make sense to sell part of your stake now.

It can also be a smart move if you're looking to diversify, especially since your income is already tied to the company's success.

On the other hand, if you believe your company's value will continue to grow, you don't need the cash, and you're comfortable with the risk, holding your shares could lead to a bigger future payoff.

For many people, the best approach is to sell a portion of their equity to lock in some gains, while still keeping skin in the game in case the company takes off.

3. Tax implications

Before selling your shares, make sure you understand the potential tax consequences.

If you're exercising and selling stock options (especially NSOs), your profits are usually taxed as ordinary income at your marginal tax rate. This can result in a significant bill, especially if your company's valuation has jumped since your grant date.

If you're selling already-owned private shares, your profits will be taxed as either short-term or long-term capital gains, depending on how long you've held them.

Shares held for more than one year qualify for the lower long-term capital gains rate; anything less is taxed at your regular income rate.

Depending on your situation, it might make sense to consult a tax advisor or financial advisor, especially if you're selling a large stake or exercising options for the first time.

4. Pricing and fees

If you're planning to sell your shares through a secondary marketplace, make sure you account for both the bid-ask spread and any transaction fees.

The bid-ask spread is the difference between what buyers are willing to pay (the bid) and what sellers are asking (the ask).

For example, if you think your shares are worth $100 but the highest bid is $95, you'll either need to accept the lower price or wait for a better offer.*

*Bids can vary across platforms, so comparing bids across a few can help you get the highest price for your shares.

Additionally, almost every marketplace charges a transaction fee when deals are completed. These fees can range from 2% to 5% of the sale amount, depending on the platform.

Before moving forward, read the platform's terms carefully so you're not surprised by how much you're actually giving up in the process.

5. Can you afford to exercise your options?

If you've been granted stock options, you may need to exercise them — i.e., convert them into actual shares — before you can sell. Depending on your strike price and the number of options you hold, you may not be able to afford exercising them.

Here are a few options.

Cashless exercise

Some companies offer a cashless exercise option, where you're allowed to sell your shares immediately and use the proceeds to cover the exercise cost. This means you don't have to pay anything up front and simply receive the net difference as cash.

However, this feature is relatively rare and usually only offered during a company-run liquidity event like a tender offer or buyback.

Options lending

If your company doesn't offer a cashless exercise, you'll need to come up with the money to exercise your options. For many employees, this is a major hurdle.

Some banks and lenders offer stock option loans, which let you borrow the funds needed to exercise. However, many banks require you to back the loan with personal assets.

More about private company stock & options

What is private company stock?

Private company stock represents ownership in a company that isn't publicly traded on the stock market.

Most private companies issue stock to employees, founders, and early investors as a form of compensation or incentive — usually in the form of stock options or restricted stock units (RSUs).

While this equity can be valuable, it's also illiquid, meaning it can't easily be sold or turned into cash until certain events — like an IPO, acquisition, or tender offer — take place.

In many cases, employees can also sell their shares on secondary marketplaces, though this requires company approval.

How do employee stock options work?

Stock options give you the right to buy company shares at a fixed price (called the strike price) within a specific time window.

For example, you may be granted 5 stock options, each covering 100 shares at $20 per share. A year later, with the stock trading at $30, your options would be worth $5,000 (5 options × 100 shares × $10 gain per share).

Of course, that value only becomes real if you're able to exercise and sell the shares.

How do you value shares in a private company?

Unlike public stocks, private shares don't have a market price you can look up, so figuring out what they're worth isn't always straightforward.

The easiest way to estimate the value of your equity is to check for updates from your company's HR or finance team. They may provide information based on:

• The company's most recent funding round
• Internal 409A valuation reports (used for setting option strike prices)
• Recent tender offers, buyback programs, or secondary sales

Just keep in mind: the price buyers are actually willing to pay — especially on secondary marketplaces — may differ from any of these official numbers.

What should you do with your employee stock options?

Should you sell now or hold on and hope for a bigger payoff later? In many cases, the smartest move is to do both.

Yes, your stock options could be worth a lot if your company goes public, but that's a rare outcome. Selling a portion of your shares lets you lock in some value now, while still keeping upside if things continue to go your way.

Final word

Selling private company stock is hard but not impossible. There are more options than ever, from company-organized tender offers and buybacks to secondary marketplaces like Hiive and Forge.

If you have a considerable portion of your net worth tied up in your company's equity, it may be a good idea to sell some of your shares and realize some of that value.

But before you do, be sure to read your company's policies and consider the costs and tax implications of your sale.

After that, enjoy your bonus — you earned it!