Shares in private companies are inherently illiquid. Private market investors should be prepared to hold on to their investments until company failure or an exit event occurs, like an IPO, acquisition, or merger. However, investors may have the opportunity to sell their private market shares on the secondary market to achieve liquidity sooner. In this blog, learn more about the secondary selling process, what it means to sell shares in private companies, and how the secondary market works.

Understanding the Secondary Selling Process

A secondary sale occurs when an existing shareholder sells shares in a private company before the company goes through a traditional exit that could provide liquidity to investors, like an IPO or an acquisition. These transactions take place on the secondary market, and shares may be offered at different terms than the original investment.

Why an Investor Might Sell Private Market Shares

There are a few reasons why an investor might seek to sell their private market shares on the secondary market:

• Access Liquidity Sooner: Due to the illiquid nature of private market shares, selling them on the secondary market may help investors access liquidity sooner than waiting for an exit even
• Handle Expiring Equity Options: Founders and early employees at startups may decide to exercise and sell their equity options on the secondary market before they expire
• Meet Financial Goals: By accessing liquidity sooner, the funds from selling on the secondary market may help fund personal milestones such as buying a house, paying for college, or starting a business

However, selling shares in private companies isn’t as simple as selling stock in public markets. The company might have specific transfer restrictions, or an investor may not be able to find a qualified buyer for their shares.

MicroVentures Secondary Selling Process

MicroVentures can help you facilitate the entire secondary share process from due diligence to closing, helping investors seeking to sell private market shares. Here’s how the process works:

Initial Contact

Investors that are interested in selling their shares with MicroVentures fill out our online form and are contacted by our deal flow team if we are actively seeking shares in specific companies or we believe that there may be a fit. MicroVentures will ask preliminary questions such as:

• How many shares or options do you hold?
• What is your asking price for the shares?
• If the investor has options, when do those options expire?

Company Research & Offer

Our team conducts research to determine if the company is a fit for our platform. That includes reviewing the company’s latest valuation, bylaws and transfer restrictions, and market demand from our investor network.

Once the decision is made to proceed, we send over an official offer with terms in addition to transaction documents. At this point, we also request documents such as:

• Proof of ownership (stock certificates or option grants)
• A copy of your ID
• The company’s stock plan (to verify transfer rules)

Signing & Onboarding

At this point in the process, the investor will sign a Letter of Intent (LOI) and a commission agreement. For all transactions, we conduct due diligence, put together a fund summary, file paperwork, and post the raise to our platform. For standard private equity transactions, we raise capital by listing the shares on our platform for ~30 days to attract accredited investors. Once the offering has concluded, we formally notify the company of the investor’s intent to sell the shares. This triggers any Right of First Refusal (ROFR) period as outlined in the original investment.

Closing the Transaction

At this point, our funding and operations team finalizes the deal. The investor will sign a transfer agreement, funds are wired to the investor, and shares are transferred to the new owner.

Common Questions

The following are some common questions we receive about selling secondary shares with MicroVentures:

How long does the process take?

The standard timeline for a secondary transaction is ~60-90, including due diligence, raise, and ROFR period.

What fees are involved?

Our commission is deducted from the sale price. Some companies charge transfer fees or require legal options. We’ll clarify these cases and fees upfront.

What if the company blocks the sale?

If the company exercises its ROFR, the shares will be sold to the company instead of our investors and the transaction will still be completed. If the company blocks the sale entirely, the transaction will not proceed.

Can I sell options?

Yes, we can help you exercise options (if needed) and sell the resulting shares.

Final Thoughts

Despite private market shares being inherently illiquid, there are still options for investors to achieve liquidity without waiting for an exit event. MicroVentures can help facilitate the entire secondary sharing process with a comprehensive white-glove approach and answer any questions you might have about the process.

Are you ready to research liquidity options for your private market shares? Submit an inquiry to sell your private shares with MicroVentures!

Are you looking to invest in startups? Sign up for a MicroVentures account to start investing!

Want to learn more about investing in startups? Check out the following MicroVentures blogs to learn more:

• Spotting Red Flags: Evaluating Startup Financials
• 2025 IPO Check-in
• Diversifying Your Portfolio: Public and Private Markets
• From Private to Public: Understanding the IPO Process

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The information presented here is for general informational purposes only and is not intended to be, nor should it be construed or used as, comprehensive offering documentation for any security, investment, tax or legal advice, a recommendation, or an offer to sell, or a solicitation of an offer to buy, an interest, directly or indirectly, in any company. Investing in both early-stage and later-stage companies carries a high degree of risk. A loss of an investor’s entire investment is possible, and no profit may be realized. Investors should be aware that these types of investments are illiquid and should anticipate holding until an exit occurs.