About kevin kemper Expertise IN my 34 + years with prospective entrepreneurs aged 7 through age 77, in Canada,
Mexico and elsewhere; both directly and through my TV show and newsletter on Entrepreneurship,
have advised on: starting a business, writing a business plan, finding staff, setting compensation
plans, when to joint venture or consider a franchise, have a partnership or corporation structure,
when to start a biz vs buying. Currently tutoring individuals in S. Africa, Bangladesh, India, China, Australia and Brazil. [My incomplete book is entitled Assured Entrepreneurial Success]
Expert: kevin kemper Date: 8/25/2005 Subject: stock options in privately held company
Question Hi, I'm considering a position with a company that has series B funding. I've previously had stock option grants (as compensation) for publicly traded companies and my question is, how are stock options typically handled if the company never independently goes public, such as in an acquisition.
Answer HOW do i answer this WITHOUT raining on your parade?
not sure I can.
A stock option, as you know, is a financial tool to benefit
the option holder based on the rise or the fall of a stock
depending on the intent of the buyer.
IN order for the company to benefit at all--thus the
option holder, the stock must have a "MARKET maker"--a
stock buyer. A large block of stock buyer.
So, until the firm is sold publicly, the option has
no "market" value. I am also sure that
somewhere, sometimes, someone sells/buys a private
corporation and merges it with a public firm and while
doing so, the private corporation might have option
holders--but that is rare because an option holder
buys a right to a climb of stock value or a drop in same.
THERE is no option benefit to the climb or drop of a private stock...........
AM I making this clear? ONLY when one is damn sure
a Sub S or C is about to go public, would any stock
option be of any value.
