8
Is Trading Private Company Stock a Good Idea?
You’re our first priority.
Every time.
NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. They are not intended to provide investment advice. NerdWallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Our estimates are based on past market performance, and past performance is not a guarantee of future performance.
We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.
So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.
Is Trading Private Company Stock a Good Idea?
Buying or selling employee equity has become easier and more accessible, but is it right for your portfolio?
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
Updated · 3 min readHow is this page expert verified?
NerdWallet's content is fact-checked for accuracy, timeliness and relevance. It undergoes a thorough review process involving writers and editors to ensure the information is as clear and complete as possible.
More on our editorial rigor
Editor & Content Strategist
6 years of experience Expertise Investing for beginners financial advice long-term investingAlana Benson is an editor who joined NerdWallet in 2019. Historically she has covered a wide variety of investing topics including stocks, socially responsible investing, cryptocurrency, mutual funds, HSAs and financial advice. She is also a frequent contributor to NerdWallet's "Smart Money" podcast. Alana has appeared on FOX Houston and the "PennyWise" podcast and has been quoted in MarketWatch and The Sun. Before joining NerdWallet, she wrote two books on identity theft and several young adult nonfiction titles. Her work has been featured in The New York Times, The Washington Post, The Associated Press, MSN, Yahoo Finance and MarketWatch.
Alana Benson is an editor who joined NerdWallet in 2019. Historically she has covered a wide variety of investing topics including stocks, socially responsible investing, cryptocurrency, mutual funds, HSAs and financial advice. She is also a frequent contributor to NerdWallet's "Smart Money" podcast. Alana has appeared on FOX Houston and the "PennyWise" podcast and has been quoted in MarketWatch and The Sun. Before joining NerdWallet, she wrote two books on identity theft and several young adult nonfiction titles. Her work has been featured in The New York Times, The Washington Post, The Associated Press, MSN, Yahoo Finance and MarketWatch. Published in Editor & Content Strategist + more + more
Managing Editor
23 years of experience Expertise Personal Finance Budgeting Taxes Retirement Underrepresented communitiesPamela de la Fuente is a managing editor of NerdWallet's personal finance content. She leads budgeting, money-making, consumer credit and and debt coverage.
Pamela de la Fuente is a managing editor of NerdWallet's personal finance content. She leads budgeting, money-making, consumer credit and and debt coverage.Ask her and her talented team about why credit scores matter, how to save money on your grocery bill, finding the right side hustle, how to protect your identity for free and more.
Ask her and her talented team about why credit scores matter, how to save money on your grocery bill, finding the right side hustle, how to protect your identity for free and more.Previously, she led taxes and retirement coverage at NerdWallet.
Previously, she led taxes and retirement coverage at NerdWallet.Pamela joined NerdWallet after working at companies including Hallmark Cards, Sprint Corp. and The Kansas City Star. She has been a writer and editor for more than 20 years.
Pamela joined NerdWallet after working at companies including Hallmark Cards, Sprint Corp. and The Kansas City Star. She has been a writer and editor for more than 20 years.Pamela is a thought leader in content diversity, equity, inclusion and belonging, and finds ways to make every piece of content conversational and accessible to all.
Pamela is a thought leader in content diversity, equity, inclusion and belonging, and finds ways to make every piece of content conversational and accessible to all.She is a graduate of the Maynard Institute's Maynard 200 program, and the National Association of Black Journalists Executive Leadership Academy. She is a two-time winner of the Kansas City Association of Black Journalists' President's Award. She was also founding co-chair of NerdWallet's Nerds of Color employee resource group.
She is a graduate of the Maynard Institute's Maynard 200 program, and the National Association of Black Journalists Executive Leadership Academy. She is a two-time winner of the Kansas City Association of Black Journalists' President's Award. She was also founding co-chair of NerdWallet's Nerds of Color employee resource group. Managing Editor + more + more How to sell your private company stock How to sell your private company stock Pros and cons of selling private company stock Pros and cons of selling private company stock How to buy employee equity How to buy employee equity Pros and cons of buying private company stock Pros and cons of buying private company stock Trading employee equity: Is it right for you? Trading employee equity: Is it right for you?If you work for a private company, meaning a company that isn’t publicly traded on a stock exchange, you may own private company stock as part your employee compensation package. Private company stock gives employees access to fast-growing companies before they go public. That may be good if you think the company will perform well over the long term. But if you don’t have much faith in your company, or you need extra cash, you might want to sell your equity compensation.
If you work for a private company, meaning a company that isn’t publicly traded on a stock exchange, you may own private company stock as part your employee compensation package. Private company stock gives employees access to fast-growing companies before they go public. That may be good if you think the company will perform well over the long term. But if you don’t have much faith in your company, or you need extra cash, you might want to sell your equity compensation .Brokerage firms
Brokerage firms
Brokerage firmson Charles Schwab's website
on E*TRADE's website
on Vanguard's website
on Fidelity's website
How to sell your private company stock
How to sell your private company stockIf your employer has given you equity such as incentive stock options or restricted stock units as part of your compensation package, you may be able to sell those ISOs or RSUs if your company allows it.
If your employer has given you equity such as incentive stock options or restricted stock units as part of your compensation package, you may be able to sell those ISOs or RSUs if your company allows it.Companies such as Forge, ClearList and EquityZen Inc., among others, specialize in helping employees sell their private company stock. These companies allow you to list your shares and what you’d like to sell them for, and then they work to find a buyer for you. The fee is usually about 5% of your transaction (the percentage may decrease if the transaction amount increases).
Companies such as Forge, ClearList and EquityZen Inc., among others, specialize in helping employees sell their private company stock. These companies allow you to list your shares and what you’d like to sell them for, and then they work to find a buyer for you. The fee is usually about 5% of your transaction (the percentage may decrease if the transaction amount increases).Pros and cons of selling private company stock
Pros and cons of selling private company stock“The main benefit of selling private company stock on a marketplace would be to gain liquidity. Private company stock is notoriously illiquid and there are many reasons why an investor would want some liquidity,” said Aaron Hatch, a certified financial planner and co-founder of Woven Capital in Santa Clara, California, in an email interview.
“The main benefit of selling private company stock on a marketplace would be to gain liquidity. Private company stock is notoriously illiquid and there are many reasons why an investor would want some liquidity,” said Aaron Hatch, a certified financial planner and co-founder of Woven Capital in Santa Clara, California, in an email interview.“One reason an investor might want liquidity is that he or she has an overconcentration of their net worth in the private company stock and would like to diversify their investments. Another reason an investor might want liquidity is to achieve a life goal for which they need cash, such as buying a home, sending kids to college, or early retirement.”
“One reason an investor might want liquidity is that he or she has an overconcentration of their net worth in the private company stock and would like to diversify their investments. Another reason an investor might want liquidity is to achieve a life goal for which they need cash, such as buying a home, sending kids to college, or early retirement.”Your ability to sell your private company stock may depend on your company’s specific policies or blackout dates. Selling employee equity may also create some tax complications, so if you have shares you’re looking to sell, it may be helpful to speak with a financial advisor or tax professional first.
Your ability to sell your private company stock may depend on your company’s specific policies or blackout dates. Selling employee equity may also create some tax complications, so if you have shares you’re looking to sell, it may be helpful to speak with a financial advisor or tax professional first.» MORE: When to exercise employee stock options
» MORE: When to exercise employee stock options » MORE: When to exercise employee stock options » MORE: » MORE: » MORE: When to exercise employee stock optionsHow to buy employee equity
How to buy employee equityCompanies that specialize in trading private company stock match sellers with accredited investors. The Securities and Exchange Commission defines accredited investors as those with either earned income over $200,000 (or $300,000 with a spouse) in each of the previous two years or someone with a net worth over $1 million (excluding the value of a primary residence)
Companies that specialize in trading private company stock match sellers with accredited investors. The Securities and Exchange Commission defines accredited investors as those with either earned income over $200,000 (or $300,000 with a spouse) in each of the previous two years or someone with a net worth over $1 million (excluding the value of a primary residence) Securities and Exchange Commission. Accredited Investors. Accessed Jul 24, 2025. .“Often, people in a company have units that have vested already, but there might not be an IPO for a long time. So an accredited investor can come in and say, ‘OK, we’ll buy your units from you and we’ll wait for the IPO, and we’ll give you something in between,’” says Chris Whalen, a certified public accountant in Red Bank, New Jersey. “So let’s say they’re sitting at $10 a share and the company expects to IPO at $100. An accredited investor might come in and offer to pay $40 a share.”
“Often, people in a company have units that have vested already, but there might not be an IPO for a long time. So an accredited investor can come in and say, ‘OK, we’ll buy your units from you and we’ll wait for the IPO, and we’ll give you something in between,’” says Chris Whalen, a certified public accountant in Red Bank, New Jersey. “So let’s say they’re sitting at $10 a share and the company expects to IPO at $100. An accredited investor might come in and offer to pay $40 a share.”» MORE: How much a wealth manager costs
» MORE: » MORE: » MORE: How much a wealth manager costs How much a wealth manager costsPros and cons of buying private company stock
Pros and cons of buying private company stockBuying private employee equity is a risky venture. These assets are not registered with the SEC, so investors may have less access to information about the company in order to make a sound decision before investing.
Buying private employee equity is a risky venture. These assets are not registered with the SEC, so investors may have less access to information about the company in order to make a sound decision before investing.Despite the added risk involved with unregistered securities, they don’t add tax complications for buyers, Whalen says. For accredited investors, private company stock just becomes another stock investment, he says.
Despite the added risk involved with unregistered securities, they don’t add tax complications for buyers, Whalen says. For accredited investors, private company stock just becomes another stock investment, he says.“For someone looking to buy private company stock, it is important to be very clear about why you're adding a specific holding to your portfolio and to be honest with yourself about the downside risks,” Hatch said. “Unlike publicly traded companies, private companies often have less public information about the company so it is very important to do your due diligence before investing and to understand the rights and limits of being a shareholder.”
“For someone looking to buy private company stock, it is important to be very clear about why you're adding a specific holding to your portfolio and to be honest with yourself about the downside risks,” Hatch said. “Unlike publicly traded companies, private companies often have less public information about the company so it is very important to do your due diligence before investing and to understand the rights and limits of being a shareholder.”Another way to buy private company stock is through a secondary sale or secondary offering. Secondary offerings occur when privately held company stock is sold to the general public after an initial public offering. In these offerings, investors sell shares to each other, generally through the stock market.
Another way to buy private company stock is through a secondary sale or secondary offering. Secondary offerings occur when privately held company stock is sold to the general public after an initial public offering. In these offerings, investors sell shares to each other, generally through the stock market.Trading employee equity: Is it right for you?
Trading employee equity: Is it right for you?Whether you’re looking to buy or sell, trading private company stock can be complex. There are companies that can make the process easier for a fee. There may also be tax ramifications to selling employee equity, so be sure to talk with a tax professional before deciding.
Whether you’re looking to buy or sell, trading private company stock can be complex. There are companies that can make the process easier for a fee. There may also be tax ramifications to selling employee equity, so be sure to talk with a tax professional before deciding.» MORE: Check out our guide to equity compensation
» MORE: » MORE: » MORE: Check out our guide to equity compensation Advertisement1
Answer a few simple questions
2
Get a recommended match
3
Start achieving your money goals
What's your financial priority?
Financial Planning Retirement Planning Investment Management Tax Strategy OtherHelpful resources
Helpful resources Best Financial Advisors How to Find a Financial Advisor Near You How to Choose a Financial Advisor in 5 Steps 3 Best Wealth Management Services More like this Investment Basics Investing Employee Equity How Much Does a Financial Advisor Cost? Most financial advisors charge based on how much money they manage for you. Fees are typically 1% a year but can be lower. 2 By Andrea Coombes, Taryn Phaneuf Do You Need a Financial Advisor? 7 Ways to Tell You may need a financial advisor if you're facing big life changes, don't have financial goals, have complex compensation, high tax bills or for other reasons. Taryn Phaneuf How to Find Cheap or Free Financial Advice Quality financial advice is more accessible than ever — and much of it is free or inexpensive. Here's how to get it. Anna-Louise Jackson 3 Steps to Prepare for Your First Financial Advisor Meeting Here's what think about and bring to your first meeting with a financial advisor. June Sham