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I wanted to inquire about an ESOP -- I just left the company…

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I wanted to inquire...

I wanted to inquire about an ESOP -- I just left the company and have 60 days to exercise. It's a private company, and since the options were issued in 2015, the company has remained profitable, and revenue has increased from about 16 to 25m annually with growth in all business units, and new business units that have been formed.Apparently, they have not completed a second valuation, so I'm unsure of what my options are right now to exercise (the total cost of my vested shares would be $58k).I don't have the cash to cover, don't know what the current value of the shares are, and whether or not I have any option to liquidate them.Any advice/guidance would be appreciated. Thank you.

Accountant's Assistant: What state are you in? It matters because laws vary by location.

Ny

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Submitted: 4 months ago.Category: Tax
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3/9/2018
Tax Professional: ABC Accounting Group, Certified Public Accountant (CPA) replied 4 months ago
ABC Accounting Group
ABC Accounting Group, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 889
Experience: Business Consultant/Accounting Manager
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Hi. Just confirming what your questions on the ESOP are. Thank you.

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Customer reply replied 4 months ago
Hi - can you see the message above? Ultimately, I would like to know my options to liquidate them.
Tax Professional: ABC Accounting Group, Certified Public Accountant (CPA) replied 4 months ago

Hi. Thank you. These are option to buy their stock, as you know. Did they give yo a plan document? Thank you.

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Customer reply replied 4 months ago
I've tried to attach it a few times and it's not working.
Customer reply replied 4 months ago
I understand that they're options to buy.
My questions are the following:
since they haven't had a valuation in 3 years since the stock was issued, are the obligated to do so if before i exercise them?
Customer reply replied 4 months ago
2. if so, and they are worth more now than the strike price, is there any way for me to get the difference between the strike price and the current value? As in, is there any way for me to have the company buy them back at that price?
Customer reply replied 4 months ago
I have 2800 shares, worth 58,000. So, I'd like to understand if there is any way those are worth anything in cash, now.
Tax Professional: ABC Accounting Group, Certified Public Accountant (CPA) replied 4 months ago

Hi.

Question 1 - they should have a current valuation - the auditors would ask for one, as well.

2 - Yes - if the option is in the documents. You can probably negotiate with them, as well on it, since they are private, not a public, company.

3 - The company may have a buyback opportunity, which would give you some $'s for the difference between the current value and strike price. If they have a stipulation that you need to hold until they go IPO in the future, that would be the only setback.

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Customer reply replied 4 months ago
I know for a fact they don't have a valuation that's current. I was communicating with our HR director and she said they did not since the first one in 2014. So they'll be forced to complete one?
Tax Professional: ABC Accounting Group, Certified Public Accountant (CPA) replied 4 months ago

They should be - at least by their auditors. I have worked in Finance Depts of private companies - they usually have to do a valuation. You should contact the finance department, instead - they usually do the spreadsheets on this.

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Tax Professional: ABC Accounting Group, Certified Public Accountant (CPA) replied 4 months ago

Sorry - or Accounting Department.

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Customer reply replied 4 months ago
OK - one last Q. it doesn't explicitly say that there's a buyback option or anything in the documents. They're being very vague so far about the process, and have only said via email that I would have to have a check for the shares. What should I request, to try to negotiate them buying back options if purchased? Are there brokers that will loan you that money for a same day transaction if I could sell them immediately?
Tax Professional: ABC Accounting Group, Certified Public Accountant (CPA) replied 4 months ago

Yes - negotiate it, but if you have that email about the check, that should suffice. I do not think there are such brokers, since there are so many rules surrounding the laws around it. However, there may be options - credit card loans (use the special rate fees (they usually will send you the money fast and at a low rate)).

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