ABOUT LIQUID STOCK
Frequently Asked Questions
We offer tailored liquidity solutions for private company option or equity holders that can optimize taxes, reduce risk, and help maximize your net worth. If you need money to exercise your options or money backed by private company shares, we may be able to help.
As pioneers in the space, Liquid Stock is unmatched in terms of experience with unlocking private company equity. Our partners have 60+ combined years of wealth management, venture capital, and legal experience, providing us with the tools and know-how to simplify any complex financial transaction. Members of our team have worked with shareholders and option holders at Airbnb, DocuSign, Uber, and more.
Definitely! We understand there is no one-size fits all. The right solution should be based on your individual circumstances. Our transactions are based on transparency, honesty, mutual understanding, and a proven history of fair dealing.
Liquid Stock is an investment firm, not a broker, marketplace, or business development group. We control our capital and assume the risks for our investments. Our firm has over $300 million in assets under management and is backed by leading institutional investors. We receive a management fee, also known as compensation, from our investors and also participate in the success of our transactions.
We offer a unique solution structured as a non-recourse transaction. This means that our transactions are only backed by your company equity – the value of your private shares, unless there is an event of default. This is typically the shares that you receive from exercising stock options using the Liquid Stock solution, or it may be the shares you already hold and choose to use as collateral for a private share liquidity transaction with Liquid Stock. Additional collateral is not needed. There are two different ways to work with us – start as an option holder or start as a shareholder (see infographic here).
We can help you exercise your stock options early, without using your own cash. We provide money for option holders to facilitate the exercise of private company stock options, as well as related taxes, so you can become a shareholder with potential tax, portability, and governance advantages.
We provide liquidity to shareholders using only their shares as collateral, while they maintain ownership and potential upside. This can be helpful for situations where you are unable to sell or are concerned about selling too early.
The Liquid Stock transaction allows equity holders to maximize the value of their equity – either via saving on taxes in an option exercise, or getting liquidity in lieu of selling shares and losing out on the potential future upside. Our cost of capital needs to be evaluated in light of these end goals. Unless there are extenuating circumstances, a transaction may not be worthwhile if the cost of capital consumes most of your expected benefit.
Our reputation has been built on providing a liquidity solution that allows company option holders and shareholders to benefit from the future upside of their equity. Overall, transactions involve what is called counterparty risk – this is when one party in the transaction does not live up to the terms of the agreement. Unlike a sale, where both parties agree to a price, effect a share transfer, and have no further obligation to one another. A Liquid Stock transaction can be open for years and both parties are relying upon the other to manage the transaction according to their agreement. Therefore, it’s important to choose an experienced partner, like us, who has a history of honesty and fair dealing. With the Liquid Stock solution, unless there is an event of default, we only look to the value of your shares as collateral, and if the value ends up being less than would otherwise be due on settlement, we assume the loss. This is a risk that must be priced into our transactions and part of the reason we receive a percentage of the value of your shares at settlement.
To proceed with our solutions, we’ll need to review evidence of your share or option ownership, as well as any associated documents. For most companies that are not already held by our fund, we may need access to detailed financial and operating information on your company.
It depends on the level of transaction complexity and access to information. At Liquid Stock we pride ourselves on efficiency and generally can complete your transaction in weeks, not months. Because there is no middleman, our transactions tend to be fast and reliable, so you don’t need to wait to access your equity.
Private financing transactions are consequential financial events for most people. It is very important for you to have an attorney representing your interests and a CPA to help you assess how a transaction impacts your specific tax situation.
Liquid Stock’s transaction structure is designed to be tax efficient and can be advantageous in certain scenarios. It is best to check with your CPA to understand the potential tax benefits.
We believe that it’s vital for you to have a close and direct relationship with Liquid Stock. You will remain in direct contact with our team from the start to finish of our transaction.
Liquid Stock only receives payment at a future company liquidity event. You may settle your transaction by using cash from selling your shares, transferring shares to Liquid Stock, or borrowing against your newly tradable shares to repay us.
As an investment firm, we hold our deals from the beginning until settlement and must ensure that companies meet our investment criteria. In general, we are looking for “best of breed” late-stage private companies to complete our portfolio.
Even if the value of your company is less than anticipated at the start of our agreement, Liquid Stock is only owed up to the value of your shares at the time of an exit event or settlement. You are not required to make up the difference.
Are you ready to own your shares?
Our team of experts can help you take control of your stock options and shares today.