Pre-IPO equity is rarely sold the same way twice. In a private market marketplace, the structure depends on the issuer's transfer policy, the seller's tax position, the buyer's appetite for vehicle complexity, and the size of the trade. If you're still building foundational context on how pre-IPO investing structures and secondary transaction types work, review the complete guide to pre-IPO investing before comparing direct, SPV, and forward deals. Three structures cover almost every transaction we see: direct, SPV, and forward — each with trade-offs, including the SPV structure risks that surface with names like Shein.
Direct purchase
The cleanest structure on paper. The seller signs the shares over to the buyer; the buyer's name goes on the cap table. No SPV, no vehicle fees, no carry. The buyer is the shareholder of record.
In practice, direct trades are the rarest. Most issuer transfer policies require the company's approval and impose conditions — minimum trade size, accredited buyer, no transfers to competitors. A handful of late-stage privates have outright bans on direct transfers and route everything through company-administered tenders. When direct works, it's the best economics; when it doesn't, you fall back to one of the other two.
SPV (special-purpose vehicle)
By far the most common structure for pre-IPO secondaries. A single-purpose LLC is formed to buy and hold the shares. Investors own membership units in the LLC; the LLC owns the shares. The LLC has a manager, a fee structure, and an operating agreement that governs distributions at exit.
SPVs solve three problems at once. They aggregate small buyers into a single line on the cap table the issuer can approve. On settlement velocity, the practical SPV versus direct transfer timeline tends to favour SPVs when the issuer is processing several requests at once. They simplify ROFR clearance because the issuer reviews one transferee, not twenty. And they create a clean tax pass-through structure so investors get K-1s reflecting their share of gains.
The trade-off is fees. Expect 1–3% one-time vehicle fee and 0–10% carry on profits at exit. Carry is sometimes negotiable for larger commitments. The operating agreement is the document to read carefully — it controls when distributions happen, whether cash or stock, and what discretion the manager has. Buyers should also map the SPV manager liability and removal terms before committing capital.
Forward contracts
A forward is a contractual right to receive shares at a future event — typically the IPO or a tender. The buyer pays today; the seller delivers shares (or cash equivalent) when the triggering event occurs. No shares change hands at signing.
Forwards are the workaround for the most restrictive transfer policies. When the issuer effectively prohibits transfers, the forward sits between buyer and seller as a private contract — neither party touches the shares until liquidity. The buyer takes counterparty risk: if the seller defaults at the IPO, the buyer is left with a contract claim against an individual.
Pricing forwards is harder than pricing direct or SPV trades. The buyer is implicitly funding the seller's tax bill at exercise (the seller hasn't sold yet, so there's no tax now — but at delivery there will be). Many forwards include a structural premium of 10–20% over the direct price to account for this and the counterparty risk.
How to choose
Each name on the Limen Markets Private marketplace lists the structures available — direct, SPV, forward — based on what the issuer allows and what the seller is offering. The desk will route you to the cleanest path that gets the trade done.