409A valuation: An independent appraisal that determines the FMV of a private company’s common stock. It’s usually used to figure out how much employees should pay to exercise (purchase) their stock options. Learn more.
Cap table: A list of all the securities a company has issued and who owns them. Learn more.
Common stock: Stock commonly reserved for employees. Learn more.
Equity: The value of stock issued by a company.
Exit: When a private company does something that radically changes the ownership structure of the company, such as going public or getting acquired.
FMV (Fair market value): What one share of a private company’s common stock would be worth on the open market. Learn more.
Liquidity: When an asset (such as shares of stock) can be converted into cash. Learn more.
Options: The right to buy shares of company stock at a specific price. Learn more.
Preferred stock: Stock commonly reserved for investors. Learn more.
RSU (restricted stock unit): A promise from a company to give shares of company stock (or the cash equivalent) on a future date if certain restrictions are met. Later-stage and public companies often offer employees RSUs instead of stock options. Learn more.
Securities: Financial assets that usually represent ownership in a company and hold monetary value. Securities include stock, convertible notes, warrants, and equity grants.
Shareholder/security holder: Anyone who owns shares of company stock/securities in a company.
Stock appreciation rights: A bonus companies can give employees. Unlike stock options, employees don’t have to pay anything to receive this benefit—they simply receive the sum of the appreciation of company stock over a set period of time.
Strike price: The set price at which someone can purchase their stock options. It’s usually the FMV of the company’s common stock when the option grant was issued. Learn more.
Tender offer: A company-sponsored liquidity event that typically allows multiple sellers to sell their shares either to an investor or back to the company. Learn more.