Frazier: Outright secondary share sales create severe tax, control, and signaling drawbacks
Nat Frazier · Justin Fishner- Wolfson - 137 Ventures (Manager Meetings, EP.25) · Dec 23, 2021 · at 9:04
Nat Frazier, Executive Director at Agility, outlines why outright secondary stock sales are disadvantageous for founders compared to structured liquidity loans.
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“The secondary market has picked up, and there are several groups, some of them with decent, good reputations, who will buy shares outright, and that's a simple transaction to get your head around. However, the tax implications can be pretty significant. The control implications for a CEO who's presumably bullish on their company can be pretty significant, and the perception. Of a founder selling out versus being in it to win it can really matter to other constituents.”
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