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DancingWalrus
DancingWalrus
Student

Require some honest understanding regards to esops

I have left company i own around equivalent to approx 6k equity shares. Have not excecised yet.

Any possibility to convert esops to cash

18mo ago
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GoofyDonut
GoofyDonut
Stealth18mo

Not unless a "liquidity event" occurs. This could be one of:

  • New round of funding, new investors replace the old
  • Acquisition/merger by/with another company
  • Buybacks, company itself buys shares from existing investors
  • Third party willing to buy shares from you, and company allows the transfer
  • Exit clauses, some have terrible "exercise or leave" clauses, forcing you to pay tax!
FluffyNugget
FluffyNugget
Plivo18mo

Would one be eligible for buyback even though one has left? 🤔

GoofyDonut
GoofyDonut
Stealth18mo

Depends on the allotment clause, usually yes if they let you keep esops after leaving

CosmicLlama
CosmicLlama
Freelancer18mo

Rule of thumb - if they offer generously, its not worth it. If they are too stingy, they have no idea what they are doing.

TwirlyQuokka
TwirlyQuokka
Stealth18mo

ESOP cannot be converted easily into cash. It's only possible if any one of the above liquidity events occur for your company.

Also, it only makes sense to exercise the stocks if you think the company's valuation will increase in future. Given the current market conditions, it would be only possible after a year or so.

Will be easier to comment if you can share company name.

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