Hacker News Reader

Comment by jacquesm | Hacker News Reader

It all depends on the acquiring party. Whatever you decide to do, do not put too much stock into promises by management (either of the company being acquired or the one doing the acquiring) about the situation post acquisition. History has shown over and over again that those promises are worth absolutely nothing.

View on HN

And also understand that it's not because they're scheming bastards, but things change and the wave can't be stopped.

Sometimes they really are scheming bastards.

Or they're innocent bystanders with many percents of preferential shares, who simply don't realize that the commoner employees under them have only a fraction of a percent of regular shares, that will all be made worthless by their actions.

I highly doubt you will find a shareholder with 'many percents of preferential shares' who don't know exactly what they are doing and why.

That too.

Also, don't put too much stock in stock if you don't get an immediate & liquid payout. Stock you can't sell is worth exactly 'nil'.

If anyone has any post-exit but not yet liquid stock that they would like to sell me for $0.01, my contact info is in my HN profile.

They may want to sell for $0.01, but they may not be able to and you won't be able to buy. See also: articles of incorporation, minutes & bylaws, shareholder agreements.

Of course. But in many cases they will. And even in cases where there are restrictions....there are often things that can be done. But that's not really the point.

My point is calling something illiquid worth "nil" is often silly. Maybe don't consider it worth its face value. Certainly don't go spending money you don't have yet. But automatically writing everything down to zero is dumb.

> not yet liquid stock that they would like to sell me

That's... isn't that impossible by definition?

When it comes to company stock liquidity isn't really binary. There are degrees.

You can't transfer the stock, but you can sell a contract promising to sell at a specific price once it's liquid.

Except if the company has a right of first refusal.

And in some cases, eg financial services companies, this can be a major violation.

Isn't that essentially shorting the stock?

It’s a put option.

If I sell it for $0.01 can I write off the difference?

Actually, I’ve heard from friends with extensive careers in finance that the value deduction for illiquidity is 30%. I’m sure this figure varies based on how far from liquidity said asset is likely to be.

That's also assuming you can find someone to buy it.

Reply on news.ycombinator.com