Secondary stock sales that allow employees at successful private companies to turn some of their equity into cash are growing in popularity. But liquidity programs—which are designed to strengthen the lure of employee stock options and other equity incentives at a time when startups are staying private longer—can be messy. They can trigger unwanted tax, legal and regulatory consequences for both companies and their workers. When done right, however, aligned liquidity programs can benefit everyone involved.
Founders Circle has handled scores of successful aligned liquidity programs. We believe they’re the best way for pre-IPO companies to relieve pressure on management and boards, while rewarding hard-working employees so everyone can focus on what matters most: the success of the companies and their people.