Pre-IPO shares are shares of a company that have not yet been offered to the public through an Initial Public Offering (IPO). These shares often hold significant value due to the potential for substantial growth once the company goes public. These shares are typically held by investors, employees, and other stakeholders of the company.
Why Pre-IPO shares are more advantageous than IPO shares:
Potential for higher returns: Pre-IPO shares can offer significantly higher returns compared to post-IPO shares, especially if the company’s valuation increases dramatically after the IPO.
Early access: Investing in pre-IPO shares allows you to gain exposure to a company’s growth potential before it becomes widely available to the public which will help you to gain more returns.
Limited supply: Pre-IPO shares are typically available in limited quantities which makes them more exclusive and potentially more valuable. Less the quantity more the demand.
Potential for discounted pricing: In some cases, investors may be able to purchase pre-IPO shares at a discounted price compared to the normal IPO price.
Also Read: Top Strategies for Buying, Investing in, and Selling Unlisted Shares.
How to sell pre-IPO shares at market price:
Selling an IPO at the market price or in the secondary market can be a process. You have to be very careful while selling your pre-IPO shares.
Valuation: Before selling your pre-IPO shares, always check the valuation of the company. Usually, the valuation of shares increases with the growth of the company. Factors such as the company’s financial performance, growth prospects, and industry trends are considered while calculating the valuation.
Finding a buyer: You’ll need to locate an investor interested in purchasing your pre-IPO shares. This can be done through personal networks, online platforms, or with the help of a broker such as Divadhvik.
Negotiating Terms: Once a buyer is found, you’ll need to negotiate the sale price, terms, and conditions. This may involve discussions about payment terms, escrow arrangements, and transfer of ownership. You have to make your buyer believe that the valuation has been calculated well and the price is the best price that they can offer.
Completing the Transaction: After agreeing on terms, the transaction can be completed through a transfer agent or a broker. This involves transferring ownership of the shares from you to the buyer.
Apart from these, there are also other ways that we can consider if we want to sell pre-IPO shares:
Direct Transfer: If you have a personal connection with another investor interested in purchasing your pre-IPO shares, you can arrange a direct transfer. This involves negotiating terms, completing necessary paperwork, and ensuring compliance with any applicable regulations.
Broker-Assisted Sale: Many investment firms offer brokerage services to facilitate the sale of pre-IPO shares. Brokers can help you find potential buyers, negotiate terms, and handle the transaction process.
Secondary Market Platforms: Specialized platforms like Forge Global, SharePost, and eShares have emerged to facilitate the trading of pre-IPO shares. These platforms provide a marketplace where investors can connect and transact.
NOTE: Often seen that the companies have specific policies regarding the sale of IPO. So, always check the company’s terms that whether they allow the transfer of pre-IPO shares or not.
Conclusion:
So If you have pre-IPO shares and want to sell those but do not have any ideas on how to calculate valuation or how to find out the seller then why not take the help of a financial advisor?
Divadhvik, Your financial advisor will help you with all your doubts and problems. Whether it is about valuation or the buyer, we all have it covered.
Contact Divadhvik for all of your queries and doubts.
Divadhvik, Your partner in the investment journey.
