Most employees and early investors who decide to sell pre-IPO shares start with the same instinct: find out what the company is currently 'worth' and price from there. The problem is that there are at least three different numbers that claim to answer that question — the most recent primary round valuation, the 409A appraised fair market value of common stock, and the secondary market mark — and they are rarely the same. Understanding the relationship between them is the single most important thing a seller can do before naming a price.

The three numbers and what each one actually represents

Primary round valuation (post-money)
The company-level valuation implied by the price paid for preferred shares in the most recent venture or growth round. This is the headline number journalists and employees use, but it reflects the price of preferred stock — a security with liquidation preferences, anti-dilution protections, and other rights that common shareholders do not have. If you hold common stock or options, you do not hold preferred.
409A valuation (fair market value of common)
An independent third-party appraisal of the fair market value of one share of common stock, required by the IRS for companies that grant stock options. The 409A is always lower than the implied common share value derived from the preferred post-money — sometimes modestly lower, sometimes 30–50% lower — because the appraiser applies a discount for lack of marketability (DLOM) and, in many cases, a discount reflecting the inferior economics of common versus preferred in a liquidation scenario.
Secondary market mark
The price at which willing buyers and sellers have recently transacted, or are currently bidding and offering, for shares or SPV interests in this company on the secondary market. This is the number that determines your actual net proceeds. It is informed by both the primary round valuation and the 409A, but moves independently based on supply, demand, and market sentiment.

Sellers who anchor only to the post-money valuation — and price their shares as if they held preferred stock — routinely discover their indications sit unsold for weeks. Buyers on the secondary market understand the structural discount between preferred valuation and common economic value. If you want to transact, your price needs to be grounded in the 409A and adjusted for current secondary demand, not in a headline number that reflects a different security.

How the 409A anchors secondary pricing in practice

The 409A is typically conducted every twelve months, or within ninety days of a material event such as a primary funding round. It produces a per-share fair market value for common stock. Buyers in the secondary market use this number as a floor and a reference point simultaneously.

When secondary market activity is strong — multiple buyers competing for limited supply, a recent positive primary round, clear IPO momentum — secondary prices for common can trade at a premium to the 409A, sometimes 10–30% above it. When activity is thin, sentiment is cautious, or a significant amount of time has passed since the last 409A without a new one, buyers shade their bids downward, sometimes to 409A or even below.

The 409A is not just a tax document — it is the primary reference price that secondary buyers use to sanity-check what they are paying for common stock.

As a seller, you want to know: what is the current 409A, when was it issued, and has there been any primary round activity since then? If a new preferred round closed at a higher valuation after your most recent 409A, a fresh appraisal would likely produce a higher common fair market value — which gives buyers more comfort paying a higher secondary price. If no new round has closed in eighteen months, buyers will apply caution.

What the preferred stack means for your net proceeds

Even if secondary buyers are willing to pay a price you find acceptable, your actual net proceeds depend on what happens at exit — and at exit, liquidation preferences come first. If you hold common shares and the company is acquired at a price below the total liquidation stack of all preferred series, common shareholders can receive materially less than the nominal per-share price implies, or in extreme cases, nothing.

Sophisticated secondary buyers model this explicitly. They will look at the company's capitalization table — or as much of it as is publicly available — and estimate the total preferred liquidation preference outstanding. Companies with multiple rounds of participating preferred present a more complex stack than those with simple non-participating preferred. The more complex the stack, the wider the discount buyers apply to common.

As a seller, you do not need to model this to the decimal. But you should understand that buyers are doing so, and that their offer reflects this analysis. If a buyer's bid feels low relative to your intuition, the most common explanation is not that they are being opportunistic — it is that the liquidation math on your company's cap table produces a lower expected common value than the post-money headline number suggests.

The lag between primary rounds and secondary marks

Secondary marks do not update in real time with primary rounds. When a company closes a new preferred round at a higher valuation, secondary prices typically lag by weeks or months. There are structural reasons for this: the 409A has not yet been updated, buyer due diligence processes take time, and secondary market participants are cautious about pricing in a valuation that has not yet been confirmed through observable transaction data.

For sellers, this lag creates a narrow window of opportunity. If you know a primary round has recently closed at a materially higher valuation, and secondary market prices have not yet caught up, you may be able to transact at a price that reflects the new primary mark before buyers re-anchor to a fresh 409A. This is a real phenomenon — but the window is typically short, and it requires you to move quickly once the round is publicly confirmed.

The reverse is also true. If your company's last primary round was twelve or more months ago, and the broader market for growth-stage private companies has softened since then, secondary buyers will shade their bids below the last primary mark. A 409A that is more than twelve months old without a refreshing event makes buyers nervous — they may apply their own informal discount on top of the stale appraisal.

Practical steps before you set an asking price

  1. Confirm the current 409A fair market value per share and its issue date. If you received options, this is in your option grant paperwork. If you hold shares, ask your company's equity plan administrator.
  2. Identify the date and post-money valuation of the most recent primary round. Note whether it was preferred and, if possible, whether the preferred is participating or non-participating.
  3. Look at current secondary market indications for your company, if available. Prices are typically expressed as a per-share dollar amount or as a multiple of the 409A. Understanding where the bid-ask spread sits gives you a realistic range before you name a price.
  4. Model your net proceeds under at least two exit scenarios — one where the company exits at or above the current preferred valuation, and one where it exits at a discount. The difference in common proceeds between these two cases tells you how much liquidation preference risk is embedded in your position.
  5. Account for all transaction costs: brokerage or marketplace fees, potential SPV carry if you are selling an SPV interest rather than direct shares, and any tax liability triggered by the sale. Net proceeds, not gross price, is what you take home.
Sellers who understand the gap between their company's post-money headline and their shares' actual secondary value close transactions faster — because they enter negotiations at a price buyers can say yes to.

Getting to a price that transacts

The goal of pricing is not to maximize the number you write on an indication — it is to find the number at which a qualified buyer will commit, ROFR will not be exercised at a price that eliminates your gain, and you net an amount you find acceptable after all costs and taxes. Those three constraints together define your real executable range.

At Limen Markets, every sell-side indication is reviewed for market alignment before it is surfaced to buyers, which means we can tell you quickly whether your ask is within range of current buyer appetite. Sellers who come in at a price grounded in the 409A and current secondary data typically see qualified buyer interest within days rather than weeks.

If you are ready to explore a sale, start at /sell to submit your holding details. Or read our guide to net proceeds modeling before you finalize your price.