[mblevin]

That would be great - but companies are going to be exercising right of first refusal and changing option plans left and right long before that happens.

Actual price transparency (with low volume that will further distort the differences) for thumbsuck, pie-in-the-sky valuations in an overheated market has only a major downside for founders and investors.

Remember your incentive stock option plan can be changed on a whim by your "stock plan administrator" (e.g. the founders and investors).

[f00sion]

If companies are buying the shares back based on ROFR then everybody wins. Employees get the liquidity and the company keeps control, but you can't do that without having a place to attract potential buyers.

[dlubarov]

I don't know how legally sound it is, but the article quotes Kenneth saying "You’re not selling the shares, so the right of first refusal doesn’t apply".

[SeoxyS]

Hey, I'm the Kenneth quoted. The quote was taken out of context, but what I was referring to is that in this scenario, you're trading a derivative and not the actual share. You're entering into a private contract with the buyer where, in exchange for a set amount of money, you're obligated to hold on to X shares of the stock, to liquidate the position as soon as legally possible during an IPO or acquisition, and to give him the proceeds. It's similar to an option on the public markets, but without the exercising bit. The buyer does not at any point own any actual shares, and does not end up on the company's cap table. Because no share changes hands, the right of first refusal doesn't apply.

This is good for the buyer, because he is guaranteed to be able to complete the transaction. This is good for the company because they don't have to choose between two annoying options: spending capital repurchasing the stock at a price set by an outsider, or having to deal with a new investor on their cap table with full information rights and counting towards their SEC investor limit.

[dlubarov]

I understand how the deal is structured, but selling your interest in some shares seems only superficially different from selling the shares directly. Perhaps the employer could argue that you're effectively selling shares and the ROFR clause applies?

I don't know, just speculating. Might not matter in practice if the employer doesn't have that much interest in exercising their ROFR anyway.