Becoming an equity partner can be a pivotal moment in your professional career. This is true whether you are an executive receiving stock options or a founder betting on yourself. These transactions have the potential to carry steep consequences if they are not handled appropriately.
Equity is often one of the most valuable types of compensation, but understanding the fine print is critical. From vesting schedules to tax exposure, each detail matters. With the support of our firm, you can move forward confident in the knowledge that your rights will be protected.
What are Equity Transactions and Sales?
Equity transactions involve buying or selling ownership interests in a privately held company. These interests can take many forms, including stock options, restricted stock, and profit interests. For executives, equity is often tied to performance. In some cases, equity vests on a time-based schedule.
In startups, equity may be granted instead of higher salaries, with the expectation of future growth or acquisition. For business owners and investors, equity sales may occur during mergers, acquisitions, or capital raises.
Legal Considerations in Equity Deals
Numerous legal issues can complicate the purchase or sale of equity. For example, certain events could accelerate the schedule for your rights to vest, while others could forfeit your interests entirely. We can ensure you have a clear understanding of when your rights might vest and when they are at risk.
Many equity agreements also include restrictions on transfer, such as rights of first refusal, drag-along clauses, or tag-along rights. These terms limit how and when you can sell your shares. In addition, disputes can arise over the fair market value of your equitable interest. The support of legal counsel is crucial when it comes to addressing these considerations.
Rely on Skilled Attorneys
Legal counsel plays a vital role in ensuring equity transactions are handled correctly. Our attorneys know how to negotiate and structure these deals, and we look forward to the chance to review complex agreements on your behalf. It is our job to help you understand exactly what rights, obligations, and risks are involved.
In transactions such as acquisitions or liquidity events, legal counsel can negotiate on your behalf to protect your interests and secure fair compensation. We can also ensure compliance with securities laws and employment regulations, helping to avoid costly mistakes or disputes down the line. Whether you’re exercising stock options, selling shares, or receiving equity in a new role, having a knowledgeable lawyer in your corner can make the difference between a missed opportunity and a successful financial outcome.