I work for a start up and received (x) amount of stocks as my compensation package. We are not public yet, however I don’t fully grasp how I can exercise these stocks once they are fully vested. What are the steps when I’d sell, and how much could I potentially make here?
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It will depend on the IPO and if you think the price will increase after that. Is your company using a financial company like Fidelity to manage your account until it is vested? If so I would talk to them. There may be more options than holding or selling.
In order to receive money for those stocks, the company must either go public (selling shares on the stock market) or be bought out by another private investor. (who would buy all the shares)
If you received actual *shares* of stocks, then once the stocks were available to sell, you would receive money upon selling them based on the selling price. If you received *stock options*, those would have a share price associated with them which you would have to pay in order to buy the stocks; if you wanted to sell the stocks without paying, the selling price of the stock would have to be higher than the option price.
More than likely, you have received an option grant as a part of your package with a vesting schedule and a strike price. So, for example, if you received 10,000 shares with a $5 strike price, a 4-year schedule, and a one-year cliff, you would be eligible to purchase 2,500 shares per year, starting on day 366 of employment for $5/share, and would be able to purchase another 2,500 shares on that anniversary for 3 more years.
You likely won’t be able to sell said shares until the company goes public or is purchased by another company.
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