Secondary proceeds go to the seller.
A secondary sale transfers existing shares. It can provide shareholder liquidity without adding capital to the company or diluting other holders. The seller’s retained stake falls because shares are sold, not because new shares are issued.
Secondary pricing can differ from the headline preferred financing price because rights, liquidity and transfer restrictions differ. This model applies one explicit discount to a reference equity value.
The formula, made clear.
- Holding sold
- A proportion of your personal stake. Selling 25% of a 20% stake transfers 5% of the company.
- Net proceeds
- Gross proceeds less seller fees; before taxes.
Put the numbers in context.
Selling one quarter of a 20% stake transfers 5% of the company. At $20,000,000.00 reference value and 10% discount, gross proceeds are $900,000.00; 2% fees leave $882,000.00.
| Input | Example value |
|---|---|
| Your company ownership | 20% |
| Portion of your holding sold | 25% |
| Reference equity value | $20,000,000.00 |
| Secondary price discount | 10% |
| Seller transaction fees | 2% |
| Seller proceeds before tax | $882,000.00 |
What this calculation assumes
Existing shares sold at a uniform price, no primary issuance. No tax, preference waterfall, transfer-right enforcement or approval analysis. Fees apply to gross proceeds.
What to consider next.
Evaluate retained exposure and review the actual rights and transfer terms of the shares being sold.
How we approach financial models →