How to choose a buyer for your private company shares
The right buyer for private company shares is the one that can commit to closing, move quickly, keep the sale confidential and work with the company's board. For founders, managers and early investors selling a meaningful stake in a tech and growth company, a direct secondary buyer, which negotiates directly with the seller usually meets these criteria best.
Marketplace or direct secondary buyer: what is the difference?
A marketplace looks for buyers on the seller's behalf, so the sale depends on finding a match at an acceptable price. A direct secondary buyer is the buyer: it studies the company, makes an offer and commits to closing once terms are agreed. For a founder or senior manager, this means one counterparty, a clear timeline and a process the board can agree to from the start.
Why does certainty of closing matter?
A sale only matters if it closes. A buyer that invests its own capital can stand behind its offer, while a buyer that still needs to raise money or find co-investors leaves the seller exposed until the last day. A buyer that has studied the company before making an offer is also less likely to change its price after the information review.
What makes a sale fast and confidential?
The timeline depends on the company's approval process, on how fast information is available and on how quickly the buyer decides. A specialist buyer with a short decision process can close within a few weeks once both sides have agreed to proceed. Dealing with a single buyer also limits the number of people who see the company's information, which matters for founders and senior managers, whose sale can be read as a signal.
Will the board accept the buyer?
Most private companies must approve any share transfer, and the board will look closely at who is buying. A buyer is easier to approve when it follows the company's transfer rules, respects the rights of existing investors and does not ask for a board seat or special governance rights.
How should a buyer approach price?
A serious buyer explains how it reaches its price: the last funding round, the company's performance since then, the share class being sold and comparable companies. Common shares held by founders and employees carry different rights from the preferred shares held by investors, and an experienced buyer can price them fairly. A price that looks high but comes with conditions or long delays can be worth less than a firm offer that closes quickly.
When should a seller start talking to a buyer?
As early as possible. A first discussion with a buyer commits the seller to nothing, and it gives a view of the likely price, the timeline and the approvals needed. It also lets the seller inform the board at the right moment and choose a window that fits the company's calendar, away from a funding round or another major event.
What happens after the sale closes?
The buyer becomes a shareholder of the company and usually stays on the cap table until the exit. A passive minority investor takes no board seat, asks for no special information rights and leaves management to run the company. For a founder who keeps most of their shares, this means the company carries on exactly as before.
About Secondary Capital Secondary Capital is a Swiss private equity fund based in Fribourg, Switzerland, founded in 2020, and a brand of PTF. It focuses exclusively on direct secondary transactions: buying existing shares from founders, management and early investors in high-growth private technology companies valued above $500 million, with tickets up to $50 million. Transactions are board-friendly, with no disruption to the company or its cap table. secondary-capital.com
This article is for general information only and does not constitute investment, legal or tax advice, or an offer to buy or sell financial instrument.
