Most secondary sale guides start with the company's transfer policy and stop there. That is incomplete. The transfer policy sets the legal framework, but your employment status at the time you initiate a sale determines which provisions of that policy apply to you, what the company is likely to do when it reviews your transfer request, and what tax clock is already running.

The three situations sellers encounter most often are: still employed at the company when initiating the sale, departed before initiating the sale, and in a transition — either during a notice period or while negotiating a separation agreement. Each carries a distinct set of risks.

Selling while still employed

Current employees have one significant advantage: they typically have access to internal communications, investor updates, and informal signals about company trajectory that inform their decision to sell. That access also creates a legal obligation. If you have material non-public information about a planned financing, acquisition, or other significant event, selling while in possession of that information can expose you to securities law liability even in the private market.

This is not a hypothetical risk. The SEC has pursued insider trading cases involving private company shares. Most secondary marketplaces, including those operating under Regulation D Rule 506(c), require sellers to represent that they are not in possession of material non-public information at the time of sale. That representation has legal consequences if it is false.

Beyond the legal question, current employees face a practical dynamic: many companies require employees to notify HR, legal, or the CFO when initiating a secondary sale. Some require affirmative company consent as a precondition to any transfer. That consent process gives the company visibility into who is selling and how much, and some companies use it informally to signal displeasure or to slow a transaction down without formally blocking it.

The consent requirement in your company's transfer policy is not a formality. It is a substantive gate that the company controls, and current employees who initiate a sale without understanding how it will be received sometimes find their employment relationship complicated as a result.

If you are a current employee and your company runs a formal tender offer — a company-organized liquidity event where the company or a third party buys shares from eligible employees at a fixed price — that is generally the path of least resistance. Tender offers typically come with pre-negotiated consent, pre-cleared ROFR waivers, and defined participation windows. The trade-off is that you sell at the tender price, which is set by the company, rather than at a market-negotiated secondary price that may be higher.

Selling after departure

Departed employees — those who have already left the company before initiating a secondary sale — face a different set of constraints. The most time-sensitive is the option exercise window.

If you hold vested incentive stock options (ISOs) or non-qualified stock options (NSOs) rather than actual shares, your option agreement specifies how long you have after departure to exercise before the options expire worthless. The default window is 90 days for ISOs — a tight deadline that can force a rushed secondary decision. Some companies extend this window for certain departing employees through amendments to the option agreement, but that extension is not automatic and must be negotiated before departure, not after.

Sellers who have already exercised their options and hold actual shares have more flexibility. Their transfer restriction analysis begins with the stock purchase agreement and the investors' rights agreement, not the option agreement. The ROFR provision — which gives the company or its designated investors the right to purchase your shares at the agreed secondary price before the sale completes — typically travels with the shares regardless of employment status.

ROFR (Right of First Refusal)
A contractual right allowing the company or existing investors to purchase shares at the same price a third-party buyer has offered, before the sale to that buyer closes.
ROFO (Right of First Offer)
A less common variant where the seller must offer shares to the company first, before seeking a third-party buyer. The price is negotiated rather than matched.
Option expiry window
The period after departure during which a vested option holder must exercise or lose the option. Typically 90 days for ISOs under the Internal Revenue Code; NSOs vary by agreement.
Lock-up agreement
A restriction, often signed at IPO, preventing shareholders from selling for a defined period — typically 90 to 180 days — after the company's shares begin trading publicly.
Separation agreement
A contractual agreement between a departing employee and the company that may impose additional transfer restrictions, non-compete clauses, or clawback provisions on equity held at departure.

One risk that departed employees sometimes underestimate is the clawback provision. Some equity agreements — particularly those signed by executives — include provisions that allow the company to reclaim vested shares or proceeds from a prior sale if the employee is found to have violated a non-compete, non-solicitation, or confidentiality obligation after departure. Sellers who are also consulting for a competitor or starting a competing venture should review this carefully before initiating a secondary sale.

Selling during a transition or notice period

The most complicated scenario is initiating or completing a secondary sale while you are still technically employed but in a notice period, on garden leave, or actively negotiating a separation agreement. This window is legally ambiguous and practically hazardous for several reasons.

First, you may still be subject to the insider trading constraints of a current employee. If you have received any information about company plans during your notice period, selling before your separation is final may raise the same material non-public information questions as selling while fully active.

Second, your separation agreement may impose new transfer restrictions that do not exist in your original equity agreements. Companies sometimes include provisions in separation agreements that require employee consent to secondary transfers for a defined period after departure, or that require proceeds above a certain threshold to be disclosed. Sellers who sign a separation agreement without reviewing the equity-related provisions carefully sometimes discover these constraints after they have already committed to a buyer.

Third, the timing of your formal separation date can affect your tax treatment. ISOs held by an employee retain their ISO status — and the associated alternative minimum tax treatment — only as long as the holder is employed. If your options convert to NSOs at separation, the tax math on an exercise changes materially. Sellers who plan to exercise and immediately sell in a secondary transaction should model both scenarios.

Signing a separation agreement without reviewing its equity provisions is one of the most common and costly mistakes sellers make. The separation agreement can alter your transfer rights, your option status, and your clawback exposure in ways that your original equity agreements did not.

What this means for secondary timeline planning

Secondary sales at reputable marketplaces typically take between one and five business days to settle after all transfer approvals are in place. But the ROFR waiver and company consent process — which must happen before settlement — can take anywhere from a few days to several weeks depending on the company, the share class, and the company's internal review backlog at the time of the request.

Sellers who are approaching an option expiry window, a separation date, or any other hard deadline cannot afford to treat the company consent and ROFR waiver as a quick formality. Build conservatively: assume three to four weeks for company review, and initiate the process well before any deadline that would affect your ability to transfer.

  • If you are approaching a 90-day ISO expiry window: start the secondary sale process at least 60 days before expiry to leave room for transfer approval and deal execution.
  • If you are negotiating a separation agreement: review equity provisions before signing, not after. Ask specifically whether the agreement adds any new transfer restrictions.
  • If you are a current employee selling in an open secondary market (not a company-run tender): confirm your company's consent and notification requirements before engaging a marketplace.
  • If you have signed a non-compete or non-solicitation: review whether clawback provisions apply to future secondary sale proceeds if a violation is later alleged.
  • If you hold shares in multiple tax lots with different acquisition dates: the employment transition date can affect which lots have met the long-term capital gain holding period and which have not.

How to approach the sale itself

The practical starting point is pulling your equity agreement, option grant notice, stock purchase agreement, and — if applicable — your separation agreement, and reading the transfer restriction section of each document. They are not always consistent with each other, and the most restrictive provision generally controls.

Once you understand which restrictions apply, you can present a clean picture to a marketplace and move quickly through execution. Sellers who arrive with incomplete documentation or unresolved questions about their status create delays that buyers notice, and in thin secondary markets, buyer patience is limited.

At Limen Markets, we run ROFR waiver and consent processes in parallel with the rest of execution — not sequentially — which compresses the overall timeline. Sellers who come prepared with their documentation and a clear understanding of their status move fastest.

If you are ready to understand what your shares are worth in the current secondary market, or want to walk through the transfer process for your specific situation, start with the seller intake on the /sell page.