This Week in Startups

Understanding Secondary Market Transactions with Becki DeGraw | Wilson Sonsini Startup Legal Basics

Jul 13, 2023

Becki DeGraw, a partner at Wilson Sonsini specializing in startup legalities, joins to shed light on secondary market transactions. She discusses how the stigma around founders selling shares has evolved, particularly as companies stay private longer. Becki explains the Pari-Passu concept, outlines who gets to sell pre-IPO, and the intricacies of tender offers. She also delves into Qualified Small Business (QSBS) stock and its tax benefits, emphasizing the importance of transparency among stakeholders for successful transactions.

24:45

Creator website

Episode guests

Becki DeGraw

AI Chapters

Episode notes

Intro

3min

Navigating Secondary Market Transactions

15min

Navigating Secondary Market Transactions and Tender Offers

2min

Navigating Qualified Small Business Stock and Secondary Market Transactions

2min

Navigating Tax Benefits and Legal Support for Early-Stage Startups

2min

Today’s show:

Wilson Sonsini Partner Becki DeGraw joins Jason to kick off another series of Startup Legal Basics! In this episode, they break down secondary market transactions, including the evolution of secondaries (00:50), trends in the industry (3:16), critical aspects of Qualified Small Business (QSBS) stock(20:06), and much more!

Time stamps:

(00:00) Wilson Sonsini Partner Becki DeGraw joins Jason (00:50) The increased use of secondary markets (3:16) How companies staying private longer influenced the rise in secondaries (4:25) Determining how much founders should be allowed to sell (6:21) Spending more than a company is worth (9:26) The Pari-Passu concept explained and how it applies to early investors, founders, and employees (10:38) Who gets to sell pre-IPO (12:44) Off the cap table transactions and hypothetical scenarios (18:26) Tender offers and the NASDAQ secondary market (20:06) The critical aspects of qualified small business (QSBS) stock

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