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Buy or Sell ESOP Shares

If you want to sell your ESOP Shares or if you’re looking to buy ESOP Shares, then you’re at right place.

What is ESOP?

ESOP means employee stock options. Under this, the companies issue shares to their employees generally at discounted rate from the market value. This is a win-win situation for both the companies and their employees. The companies get the required funds for their growth and expansion and on the other hand, their employees get the companies’ shares which they can liquidate after a certain time to make good money in the future either to their companies or in the listed (if the company is listed) or unlisted market.

Why ESOPs?

ESOPs are the smart tool used by the company to take dual benefits. The startups generally issue a lot of ESOP shares. So how companies get benefitted?

  • ESOPs help companies to reduce their operational expenses. Companies give less salary to their employees but compensate the same through ESOP shares. This will help start-ups to acquire talent at a lower cost.
    For example, let us suppose the package of the employee in the company is 10 lakhs per annum. The company may give 8 lakhs as cash and rest 2 lakh in the form of ESOPs i.e. shares of the company.
  • ESOPs have a certain time frame before which they can be exercised. It means employees have to work in the company for a certain period to get eligible for buying shares of the company. Generally, ESOP shares are given in tranches of 25% every year and 100% gets completed in 4 years. As ESOP shares are issued in tranches, the attrition rate (the speed at which employees are leaving the organization) gets reduced considerably. Employees think that if they leave early, they will not get the benefit from ESOPs shares. So they work longer in the company.

Advantage of ESOPs for Employees?

ESOPs can be a game-changer for the employees. If an employee is having ESOP shares of a company that has become Unicorn-name given to the startup having valuation above $1 Billion dollars, then the value of those ESOP shares will make employees super-rich.

We have seen this in the case of Flipkart India, when it was purchased by Walmart at a whopping valuation of 1.16 lakh Crores in the year 2017-18. Flipkart India had given ESOP shares even to the drivers of the company. So in that deal, everyone got a big chunk of return on ESOP shares and after that deal, many became millionaires.

Similarly, Paytm has issued ESOP shares to its employees at Rs.90 per share and in the unlisted market, it was sold in the price range of 5k to 18k. So we can calculate the kind of return they have generated. Obviously, the number of shares given to employees under ESOP scheme depends upon a position in the company but even then the small number of ESOP shares can make an employee rich once the company’s valuation touches the unicorn status.

Problem for Employees?

Liquidation is the biggest problem for the employees who are having ESOPs of the startups. Let us suppose the employee has ESOP shares in his/her demat account. And he/she wants to sell ESOP shares to get some immediate funds. So what is the solution?

They can approach the company requesting to buyback those ESOP shares. This option is not viable most of the time.

So what is the next solution?

The best solution is they can come to the platform like UnlistedZone to sell their ESOP shares.

Why UnlistedZone?

UnlistedZone.com has a large number of investors who are constantly looking to invest in good startups. UnlistedZone.com gives an opportunity to the employees to liquidate their ESOP shares whenever they want to. Depending upon the demand of ESOP shares of the company in the unlisted market, the UnlistedZone provides the fastest turnaround time in completing the deal.

So, if you are an employee of fastest-growing startups in India and want to liquidate your ESOP shares, please feel free to contact our team.

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