Pre-IPO Private Stock Shares of a startup company that plans to go public with an initial public offering (IPO) are often easier to cash out. A number of web-based companies, such as EquityZen and Forge, connect sellers of, and investors in, pre-IPO shares. Pre-IPO private company stock exchanges are essentially venture capital markets for the masses. An employee who holds stock in a pre-IPO private company can list shares for sale on such an exchange. Some of these secondary market sites offer loans to buy pre-IPO stock. Valuing Shares Before you sell private company stock, you need to get its valuation. You can obtain this through either the company itself or a private valuation service. Non-pre-IPO Private Stock It is trickier to sell the stock of a private company that has no intention of going public. The lack of information about most private companies dissuades most outside investors. They can be reluctant to buy into a company that they know nothing about and cannot thoroughly research in public documents. In any case, the company may not approve the sale of its stock to outsiders. The simplest solution for selling private shares is to approach the issuing company and ask how other investors liquidated their stakes. Some private companies have buyback programs, which allow investors to sell their shares back to the issuing company. In addition, an insider may be able to provide leads about current shareholders or potential investors who have expressed interest in buying the company's shares. The seller would be wise to visit a securities lawyer to make sure the paperwork is done correctly. Although private stocks are not registered with the Securities and Exchange Commission (SEC), all SEC regulations that apply to selling stocks must still be followed. How Do I Sell Private Company Stock? First, contact the company to obtain permission to sell your shares. Also, you'll need agreement on the manner of sale. The company can provide you with a valuation of its stock. Next, you'll need to find a buyer. Perhaps the simplest way to sell your stock is through a buyback program offered by the company. The company can also explain how other investors sold their stock. Finding a buyer can be a challenge due to the lack of public information about a private company. To ensure proper paperwork connected with a sale, consider consulting a securities lawyer. How Do Private Companies Issue Stock? These days, private companies usually issue stock electronically instead of via paper certificates. Shareholders receive an email providing proof of ownership and all other details. How Do Stock Options Work for Private Companies? Stock options give you the right to buy a company's stock at a predetermined price within a particular time period. They're often used by a private company as an incentive for employees to stay and participate in the growth of the company. Article Sources Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.