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Pre-ipo stock options value

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pre-ipo stock options value

Pre-IPO vs IPO Price. Show all Wiki Recent Changes. A buddy of mine was granted "Pre-IPO" stock options in the tech company he works for not too long ago. Fast forward a few months and the company has declared they are, in fact, going public. What am I missing here? Is this some sort of sneaky retainment tactic or am I misunderstanding something? Maybe his option is for preferred shares? You can value private company shares at whatever you want. There are different methods for valuing a private company, but at the end of the day hey, will I get kicked in the nads for using that term? Banks and VC firms won't accept some arbitrary or Chinese math valuation, they will do their own. He got the option to by at a price. If the stock goes higher than that, he can exercise the options and make money. If it never gets there while the options are still validhe can't make any money, nor loses any Originally Posted by ericinmich. Maybe his shares got diluted because of new preferred stock being options Originally Posted by Flot. I understand - what was confusing to me is I had never heard of options getting a base price outside of fair market value. Was there or will there be a stock split pre-IPO? Let's say there is a 4 for 1 split just prior to the IPO. Another defination goes something like pre-IPO means betting with the 'house' underwritter that the price will go up. Essentually a free loan for the house. You get to find a good accountant who will use the lower tax rate for you compared to regular income. There are numerous exclusions and requirements that go along with this but the general idea is: Qualified Small business stock has very tax preferential value when it becomes either worthless or sold at a gain. One of the requirements is purchase at initial offering. By offering Pre-IPO options, they are stock for this potential treatment for the employees of the company. Tell your friend to talk to a CPA about this. There are numerous restrictions that have to be met to get this treatment. Options are considered original issue even if you exercise them later but there is stock asset test that can void this. Like I said, this is one consideration and one I'd look into. I've seen clients try to claim it. PreIPO valuations are usually determined as a a tradinging indicator for that sector. IE Multiplier effect of earnings. Did revenues options, or the balance sheet fall since he was issued the pre-ipo shares? Technology stocks are really tricky as some of them have pre-ipo revenues and the value is all in the idea. Well that is dependant on what groupon accounting standards you choose. When you say, "Fast forward a few months Look at what happened at Zynga ZNGA in the run up to their IPO last Friday, and you could be talking about your buddy's situation in a nutshell. Thread Tools Show Printable Version Email this Page. Search this Thread Advanced Search. BB code is Value. All times are GMT The options now is Contact Us - The Hull Truth - Archive - Privacy Statement - Cookie Policy - Terms of Use - Top. Pre-IPO pre-ipo IPO Price A buddy of mine was granted stock stock pre-ipo in the tech company value works for not too long ago. Somewhere value the middle of Michigan Posts: Made him feel good for a while, didn't it? Republic of West Florida - the ORIGINAL lone star state Posts: Originally Posted by ericinmich He got the option to by at a price. Originally Posted by Flot I understand - what was confusing to me is I had never heard of options getting a base price outside of fair market value. Folly Beach, SC Posts: Chapel Hill and PKS, North Carolina Posts: Pre-ipo in Texas Posts: You may not post new threads You may not post replies You may not post attachments You may not edit your posts BB code is On Smilies are On [IMG] stock is On HTML code is Off Trackbacks are Off Pingbacks are Options Refbacks are Off Forum Rules.

Determining Basis in Employee Stock Options

Determining Basis in Employee Stock Options pre-ipo stock options value

3 thoughts on “Pre-ipo stock options value”

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