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Sellers Of Pre-IPO Shares Leaving Money On The Table

Lack Of Tax Planning Takes A Bite

San Jose, California, USA – WEBWIRE

Diversifying a concentration in company stock is good. Doing it without proper tax planning is not.

As a result of changes in sale restrictions over the past few years, more and more employees who own shares of their pre-IPO companies are seeking to sell those shares.
Recent Google search trends indicate more and more people searching for terms such as “sell my pre-IPO shares” and “sell my private company shares.”
EquityZen is a New York-based firm specializing in the purchase and sale of pre-IPO shares.  In years past, founders and employees had limited, if any, avenues through which to seek liquidity for their shares.  EquityZen was launched to address precisely this problem, and has a robust network of accredited investors seeking to purchase these shares. 
Whether an employee stays with a company or is leaving, life events — such as the purchase of a home or another need — often precipitate the sale of pre-IPO shares.  EquityZen co-founder Shriram Bhashyam notes that the need for liquidity is heightened in today’s environment where companies are staying private longer.
In some cases, an employee’s sale of pre-IPO shares is simply to diversify one’s net worth.  According to Nancy Woodall, president of California-based Meridian Investment Counsel, such diversification is a smart step.  However, she is cautious.  On one hand, diversification is a good thing.  On the other hand, she finds that it is often the case that such individuals don’t have a qualified tax planner advising them on strategies to reduce the tax burden on the sale of their shares.
This last point is echoed by Forbes Online contributor Todd Ganos.  Even if an individual uses the services of a CPA for tax return preparation, the vast majority of CPAs are unfamiliar with tax strategies that can result in significant tax savings.  The challenge for CPAs is the breadth of tax rules with which they must be familiar.  On the other hand, there are tax planners who specialize in such sales of pre-IPO shares.  Ganos advises that these individuals do their homework before pulling the trigger on a sale.
A complimentary consultation on potential tax savings on the sale of pre-IPO shares is available at


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