You have decided to sell a portion of your pre-IPO equity. You have a price in mind. What you may not have thought through yet is how the structure of the transaction — specifically, whether the buyer is taking a direct transfer of your shares or acquiring membership interests in an SPV that will hold those shares — affects how much you actually receive, how quickly you receive it, and how straightforward the closing process will be. These are not minor details. For large transactions, structure can mean the difference of several percentage points of your gross sale price.

The two basic structures, defined plainly

In a direct transfer, you sell your shares — or the vested options you intend to exercise — directly to the buyer. Title transfers from you to the buyer (or a nominee entity controlled by the buyer). The company's transfer agent or cap table records are updated to reflect the new holder. You receive cash proceeds at closing.

In an SPV-backed transaction, the buyer creates or contributes to a Special Purpose Vehicle — a limited liability company or limited partnership formed for the purpose of holding a single company's shares. You sell your shares into that SPV, which then issues a membership or limited partnership interest to the buyer. Your shares are on the SPV's books; the buyer holds an interest in the entity, not the shares directly. You still receive cash at closing, but the mechanics to get there are different.

Direct transfer
You sell shares directly; buyer appears on the cap table as a new shareholder. Company consent and ROFR clearance are typically required.
SPV transfer
You sell shares into an entity; buyer holds a membership interest in that entity. Company consent and ROFR rules still apply to the share transfer into the SPV, but subsequent transfers of the SPV interest may not trigger ROFR again.
Forward contract
You agree today to sell shares at a fixed price on a future date or upon a defined trigger. You remain the shareholder until settlement. Counterparty risk is the primary additional variable.

How each structure affects your timeline as a seller

Timeline is often the seller's primary concern — especially sellers who are monetizing equity to cover a tax bill, purchase real estate, or reduce concentration. Every structure involves some delay, but the sources of delay differ.

Direct transfers typically require the company to formally review and consent to the transfer, and to either waive or exercise its Right of First Refusal (ROFR). ROFR waiver timelines are set by the governing documents — commonly ten to thirty business days after proper notice. That window runs regardless of how motivated buyer and seller are. Platforms that clear ROFR in parallel with documentation preparation can compress total closing time materially.

SPV-backed transactions have their own preparation overhead: the SPV must be formed or an existing vehicle identified, operating agreements drafted or amended, and subscription documents signed. If your buyer is using a templated SPV structure with pre-prepared documents, this overhead is modest. If the vehicle is being built from scratch with bespoke legal work, it can add two to four weeks before the company even receives notice of the proposed share transfer.

For sellers, timeline certainty is worth nearly as much as price certainty. A trade that closes in five days at a slight discount to a trade that may close in six weeks — or may fall through — is often the better choice.

What ROFR means for sellers specifically

Sellers sometimes assume ROFR is primarily a buyer's problem — the company might intercept the trade, the buyer loses out, and the seller still receives proceeds. That is technically correct in the narrow sense: if a company exercises ROFR, you receive the agreed transfer price from the company rather than from the buyer. But sellers bear costs too.

If the company exercises ROFR, the proceeds timeline resets — you are now waiting for the company's internal process to fund the repurchase, which may be slower than a well-capitalized secondary buyer. More importantly, the company's repurchase price is locked at the agreed transfer price; if that price was based on a secondary mark that the company considers aggressive, they may elect not to exercise — meaning the trade falls through entirely and you return to market. Companies also occasionally exercise ROFR selectively, complicating partial sales.

Net proceeds: what to model before you accept a price

Headline price and net proceeds diverge for several reasons sellers commonly underestimate. Working through each before you accept a price — or a structure — is basic hygiene for a large secondary transaction.

  • Transaction fees: marketplaces, brokers, and placement agents charge fees ranging from 1% to 5% of gross proceeds. Understand whether the quoted price is gross or net of fees and who pays what portion.
  • Exercise costs: if you are selling vested options rather than already-issued shares, you will need to exercise before or concurrent with transfer. Option exercise costs — the strike price multiplied by share count — come out of your proceeds. On deep-in-the-money ISOs this can still leave strong net proceeds; on NQSOs (non-qualified stock options) at a low strike, the spread triggers ordinary income at exercise, further reducing your take-home.
  • SPV management fees and carry: if you sell into an SPV, and the buyer is an institutional fund that charges its own investors fees and carry, those economics are the buyer's problem — not yours. But if you are a seller who previously acquired equity through an SPV and are now selling your SPV interest, your proceeds may be subject to carried interest or a preferred return in favor of the GP before you are made whole. Read your existing SPV operating agreement before assuming all proceeds flow to you at par.
  • Escrow and holdback: some transactions involve a portion of proceeds held in escrow pending representations and warranties. The escrow period, its conditions, and the release mechanism all affect when you receive your full amount.
  • State and federal tax: secondary sale proceeds are generally treated as capital gains. Whether they qualify for long-term capital gains treatment depends on your holding period and the structure. ISOs held long enough may qualify for preferential treatment; shares sold before the requisite holding period triggers ordinary income. Your net after-tax proceeds can vary by twenty percentage points or more depending on your holding period and the rate that applies.

When a direct transfer is structurally better for sellers

For most sellers, a direct transfer — when the company is cooperative and ROFR is likely to be waived — is the cleaner path. You receive proceeds, the trade is simple to explain to your tax advisor, your cost basis and holding period carry forward straightforwardly, and there is no intermediate entity whose operational health you need to monitor.

Direct transfers are also preferable when your shares are common stock or early-exercise restricted stock where holding period for long-term capital gains or QSBS treatment is already established. Introducing an SPV layer does not extend or change your personal holding period — you sold the shares at closing — but it can create documentation complexity that your accountant will need to sort through.

When an SPV structure benefits the seller indirectly

SPV structures benefit sellers indirectly when they expand the buyer pool. Some buyers — particularly family offices and smaller fund managers — prefer SPV interests because they allow the buyer to aggregate smaller checks from multiple investors into a single vehicle. A buyer who cannot write a $500k direct check may be able to close a $500k SPV interest. If you need to move a large block, an SPV buyer may be the only buyer with enough demand to absorb your full position.

SPV structures also have an advantage in names where the company has historically been restrictive about the number of direct shareholders on the cap table — a common concern for companies approaching the SEC's threshold for mandatory reporting (historically 2,000 holders of record, or 500 non-accredited holders). An SPV collapses multiple economic interests into a single cap table entry. Companies are sometimes more willing to consent to a transfer into an SPV for this reason, which can reduce ROFR risk and speed company consent.

A simple framework for sellers choosing between structures

  1. Confirm whether your shares are already issued or still in option form. If options, model exercise cost and the tax treatment of the spread before comparing net proceeds across structures.
  2. Ask your buyer whether they intend to take shares directly or into an SPV, and request clarity on whether SPV fees or carry apply to your portion of the transaction.
  3. Check your existing equity documents for any ROFR, co-sale rights, or consent requirements, and ask the marketplace how they manage those rights — parallel or sequential to execution.
  4. Request a net proceeds estimate in writing — gross price less all fees, exercise costs, and any escrow — before signing any letter of intent or term sheet.
  5. If you hold your equity through an existing SPV, read the operating agreement carefully to understand whether your interest can be transferred and whether any GP approval or preferred return applies before you receive proceeds.

Sellers who model net proceeds before comparing offers, rather than after, consistently make better decisions about which trade to accept and when. If you are ready to explore current buyer demand for your pre-IPO equity, visit the Sell section to see which of our 28 listed issuers have active buyer interest today.