don't many option plans say that shares are non transferable until a liquidity event unless company decides they should be transferable (ala what uber did recently).
OP is extraordinarily lucky that his company allowed a stock transfer, with extraordinary being too weak of a word to describe his circumstance.
Someone lends you money to exercise your options, you pay them back (at IPO or acquisition) as well as additional compensation for their risk of your shares being worthless.
There is a lot of uncertainty about whether these loan-and-pretend or forward structures violate the spirit of one’s stock option contract, which can and has resulted in forfeiture, and if it involves creating an off-exchange securities swap, illegal since Dodd Frank for non-qualified participants. It was receiving regulatory attention before cryptos distracted everyone. (One firm even got jammed by the SEC early on for structuring illegal swaps.)
Post-IPO the shares are prob deposited in Computershare and as a shareholder you can transfer it to anyone you want.
Kind of like saying "anyone can buy a car without having a job or savings" — it's true, but those deals aren't comparable to those that can buy a car with cash.
Appears to be a reasonable option if you have a large amount of options and prefer the cash now vs later.
> All of these deals require approval by the company. Which means you don't get to choose the firm, you get to deal with the firm they approve of.
EDIT: These transactions require no agreement from your company in order to execute.
Most stock options have short expirations (10 year is still very uncommon). There is no "now vs. later" choice, it's a "now or never choice"
All of these deals require approval by the company. Which means you don't get to choose the firm, you get to deal with the firm they approve of.
That kind of deal is in the 1% of deals they make. Almost all require option holders either repay loans or take on significant risk.
I know this stuff sounds great on paper, in practice it is another world. Not to mention the absurdity of giving away half or more of your gains to a private equity firm from options you earned, just because the company has made a weird rule.
And they're right, it is fairly risk free. The investors understand (and sign a lot of paperwork indicating that) they understand it's extremely high risk and will possibly end up that (a) the shares will be worth nothing or (b) the company may never, ever offer a liquidity event. In the event that they do, the shares or derived value thereof transfer to the lender/investor. In the event that they don't, the instrument performs exactly like a loan/promissory note backed by the equity the shareholder owns with no vehicle for enforcing repayment beyond derived value from the shares.
Though I'm not sure what's stopping you from just making up a contract that says I agree to sell you X shares for price $Y in the event that they become publicly transferrable and then selling that contract.
I think options agreements usually contain language that say you're not allowed to do that, so maybe the risk is if you were to get caught doing that they could cancel all your options.