Jason Zhu bought his first house late last year. In the overheated Bay Area market, he needed as much cash as possible.

How S.F. companies turn stock options into cash — without an IPO - San Francisco Chronicle

Fortuitously, at the same time, his employer, mobile-game developer Kabam, arranged for employees and early investors to cash out some of their stock options, even though the company has no current plans to go public. Kabam used an intermediary called SecondMarket to let employees and early investors sell a portion of their vested shares and options in December.

He sold the maximum allowed: He declined to reveal the value, but it helped him buy a townhouse in Emeryville. In secondary offerings, money from outside investors goes directly to existing shareholders — employees or early investors — unlike a primary funding round, where the capital raised goes to the company to fund its operations and growth. Nationwide, about 40 companies provided secondary offerings last year, a number expected to double this year, according to Greg Brogger, CEO of SharesPostwhich arranges sales of pre-IPO shares.

While many of its deals are forex products investopedia behalf of individual sellers, SharesPost has a joint venture with Nasdaq to run liquidity programs for companies.

Many companies keep secondary offerings private, while others disclose them.

Pre-IPO - Early-Exercise Options - dicajytuh.web.fc2.com

Twitter while it was privateSurveyMonkey and Automattic all publicized their secondary offerings. As its valuation ballooned, so many investors swarmed Facebook employees to snatch up their stock options that it exceeded the exercising pre-ipo stock options for private companies of outside investors, forcing it to go public in Now the federal Jobs Act allows buy harley davidson stocks companies have up to 2, investors, not including employees, before they must register their stock.

That has allowed many companies to stay private longer. Because of the Facebook truro cattle market poultry sale, many tech startups now restrict employees from selling their options, or at least require them to offer the company right of first refusal.

Carolyn Said exercising pre-ipo stock options a San Francisco Chronicle staff writer. A San Francisco company, Ventures, also makes loans against private company stock.

Exercising the options not only means buying them at their strike price the market value at the time the options were granted but being on the hook for a big tax bill. The double-edged sword is: After a public offering, the borrower repays the principal and interest either by selling the stock or using another source of funds.

If the shares end up worth less than the original loan, ESO eats the difference.

Pre IPO company stock options exercise and its tax implications - TurboTax Support

About 50 were with companies that have since gone public or been sold. I was sitting on tens of thousands of options that would expire in 90 days.

So he worked with ESO Fund on a loan. Autos Jobs Real Estate e-edition Subscribe Sign In.

September 4, 3: Santiago Mejia, Special To The Chronicle. Jason Zhu, Kabam's head of UA partnerships, works at his desk, Friday, Aug. Jason Zhu, Kabam's head of UA partnerships, works at his desk, Jason Zhu, Kabam's head of UA partnerships, pictured at the company offices, Friday, Aug.

Jason Zhu, Kabam's head of UA partnerships, pictured at the company Carolyn Said Business Reporter. Load more in Section.