hedge question
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- Llyod
how are shares divided within a privately held company that plans on going public? I worked for a dotcom that gave me 10,000 shares but I didn't know how many shares there were total. What is the typical number?
- Llyod0
I'm assuming that they're putting a valuation on their business plan, but everyone I know gets 10k. wtf
- hedge0
There is no typical share float amount for private companies. It all depends on the company's specifics. Market capitalization, revenue, profit/operating margins, etc.
- hedge0
If you're trying to sell the shares, it can be a rather difficult process, Llyod. Since private shares represent a stake in a company that is not listed on any exchange, finding a buyer usually isn't easy. The lack of information about most private companies tends to dissuade investors, who are usually very reluctant to buy into a company that they know nothing about.
- Llyod0
I'm not planning on selling anything. I just want to know how much to divvy up in case in case I start a shop or end up an employee of a dotcom.
- ukit0
They probably gave you 1% Llyod
- johndiggity0
private companies can create more shares after a vote by the board of directors. they commonly do this to raise capital, or if they bring on new investors, to give them interest in the company. likewise, anyone wishing to sell their shares is usually at the mercy of the board's decision as the shares can only be sold to current shareholders. you selling your shares would decrease the value of existing shares.
- hedge0
Well, in addition to company buyback programs, there are instances where the shareholder may sell to outside parties when liquidating his stake. This usually requires a third-party mediator (i.e. a securities lawyer) to legalize the transaction and follow SEC regulations. Private companies may also be able to provide leads about current shareholders or new investors who have expressed interest in buying the company's shares.