Exits and alternatives
Transfer restrictions
ROFR, company consent, securities law and lockups — why a marketplace match is the start of paperwork, not a sale.
Even if a stranger offers to buy your shares, you usually cannot sell freely. Private-company stock is restricted by contract and by securities law. A match on a secondary marketplace is the start of paperwork, not the end.
| Restriction | Effect |
|---|---|
| ROFR | Company/investors can buy on the same terms as your buyer |
| Company consent | Transfers require approval; often denied for random buyers |
| Lockups / market standoffs | Contractual blackout periods around financings or IPO |
| Securities law | Private shares are restricted; buyers must be accredited; legends on certificates/book entries |
| IPO lockup | After going public, typically ~180 days before insiders sell freely (see IPOs) |
The big idea
A concert ticket that says "not transferable except through the box office" is the picture. Someone can offer you cash in the parking lot. The venue can still refuse or match. The analogy breaks on securities law: even a willing company cannot turn you into a public-market seller.
Secondary marketplaces exist for well-known late-stage names. Prices there can diverge from the last preferred round: demand for hot companies can push secondaries above the last round; weaker names trade at steep discounts. Company approval and ROFR still apply in most cases.
Trade-off
Open marketplace sale vs wait for a company tender. Marketplaces can price faster and sometimes higher for famous names, but approval risk, ROFR friction, and information asymmetry are high. Tenders are slower and capped, but cleaner: fixed process, known buyer, company blessing, clearer tax docs. Prefer the tender when you are rank-and-file; negotiated secondaries are more available to founders and executives.
ROFR and co-sale in the financing docs are covered in ROFR and co-sale. Insider trading rules still apply to private-company tenders if you have material nonpublic information.
Common mistakes
- Treating a marketplace match as a closed sale. ROFR and consent still have to clear.
- Selling to a non-accredited random buyer. Securities rules usually block it.
- Ignoring IPO lockup as if going public meant you could sell on day one.
Check yourself
A platform matches you with a buyer at a great price. Are you done?
No. Company consent and ROFR typically still apply. The match starts paperwork.
When is a company tender usually the better path for a rank-and-file employee?
When you want a known buyer, company blessing, and cleaner tax docs — even if the price is capped and slower.
Key takeaways
- ROFR, consent, legends and accredited-buyer rules block most casual sales.
- Marketplace prices can sit above or below the last preferred round.
- Prefer the tender unless you are a founder or executive running a negotiated secondary.
Further learning
Next, pricing and tax.
Related
Secondaries and tender offers
Liquidity before exit for founders and employees: secondary sales, tender offers and their rules.
ROFR and co-sale
How the company and investors can match a founder share sale, and sell alongside it.
IPOs and going public
The map of listing — traditional IPOs, lockups, preferred conversion, direct listings and why companies stay private longer.