• Introduction
    ▼
    • Why Companies Are Embracing Employee Liquidity
    • How to Run a Successful Liquidity Program
  • Set Eligibility and Restrictions
  • Identify an Optimal Buyer and Structure
  • Set a Price
  • Investigate Impact on the 409A Valuation
    ▼
    • 409A Valuation
    • Hypothetical Scenarios
  • Prepare Company Disclosures and Information for Due Diligence
  • Provide Information to Employees
  • Determine the Legal Implications
    ▼
    • Stock Transfer Restrictions and Rights
    • Symmetry of Information Sharing
    • Exposure to Legal Liabilities
  • Determine the Tax Implications
    ▼
    • Taxation Issues Around Each Type of Stock Issuance
    • QSBS-See If Anyone Qualifies for Special Tax Treatment
    • How to Make an Employee Tender Offer Less Taxing
  • Get Your Message Right – Inside the Company
  • Conclusion
You are here: Home / Liquidity Guide by Founders Circle Capital / Get Your Message Right – Inside the Company
Link to: Liquidity Guide by Founders Circle Capital
Founders Circle Capital - Liquidity Giude
Download Now

Step 9

Get Your Message Right – Inside the Company

The day you announce the employee liquidity program should be a celebration led by the founder and the board of directors. The all-hands meeting will explain the liquidity plan shares and how the program works. It’s time to recognize that employees have worked tirelessly and deserve some release from their financial pressures.

But celebration is only 20 percent of the communication

If you’re a seller, it is highly advisable to see a lawyer, a tax advisor, and a wealth manager.

The real aim of any employee liquidity plan is to give employees a break and then challenge all stakeholders to be patient, continue working, and focus on the long-term goal of building a company that they are proud of. The remaining 80 percent of the presentation should stress that there’s still a lot of work to be done. The focus is on the IPO horizon and beyond.

As you drive home the message of the liquidity plan, remind employees that no one has hit the jackpot. This isn’t the time to retire early or to head on an extended vacation; it’s not a value-maximizing event. Employees should sell only what they really need. They are giving up some monetary upside by selling now, and there will be taxes to pay — and by no means is this going to turn into an annual visit to the company ATM.

  • Introduction
    • Why Companies Are Embracing Employee Liquidity
    • How to Run a Successful Liquidity Program
  • 1
    Set Eligibility and Restrictions
  • 2
    Identify an Optimal Buyer and Structure
  • 3
    Set a Price
  • 4
    Investigate Impact on the 409A Valuation
    • 409A Valuation
    • Hypothetical Scenarios
  • 5
    Prepare Company Disclosures and Information for Due Diligence
  • 6
    Provide Information to Employees
  • 7
    Determine the Legal Implications
    • Stock Transfer Restrictions
    • Symmetry of Information
    • Exposure to Legal Liabilities
  • 8
    Determine the Tax Implications
    • Taxation Issues Around Each Type of Stock Issuance
    • QSBS — See If Anyone Qualifies for Special Tax Treatment
    • How to Make an Employee Tender Offer Less Taxing
  • 9
    Get Your Message Right—Inside the Company
  • Conclusion

Up Next:

Conclusion

TELL US WHAT YOU THINK

What topics would you like to learn more about? Or what topics would you like to contribute to?

Twitter LinkedIn About Us

Liquidity Guide © Founders Circle Capital 2021

Scroll to top

Take a look at our 2022 Year in Review.

Got it!
X