What happens to the ESOPS if the company cancels the IPO and decides not to go public?

General
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Say, Suppose I have bought ESOPS assuming that the company will go public someday. What happens to the unlisted shares that I bought if the company cancels the IPO and decides not to go public? Is all my money lost?

@Quicko

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You’ll still hold the stocks but ownership will be of an unlisted company.

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But what do I do with the unlisted shares? It’s of no use so will I lose my invest amount?

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Hi @Jack_R

If you have ESOPs of even an unlisted company, you will get ownership of shares in that company.
Since the company does not get an IPO/cannot raise money/remains unlisted or does not come up with a buyback, you will be at risk. However, you will be able to sell those shares off-market. In this case, the returns from the ESOP might be inadequate till the company goes public.

In case you leave that company, you will not be able to participate in the buyback process and sell those shares. However, you will still have the ownership and you will be able to sell once the company is listed on the stock exchange.

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If a company cancels its initial public offering (IPO) and decides not to go public, so the company may explore alternative arrangements, such as converting the ESOPs into another form of equity or compensation, or providing alternative benefits to the employees in lieu of the cancelled IPO.

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Thanks. Can u plz give some examples of alternative benefits?

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Examples of alternative benefits that a company may provide to its employees in lieu of a cancelled IPO could include:

Additional stock options: The company may offer additional stock options to employees to compensate for the cancelled IPO.

Restricted stock units (RSUs): RSUs are a form of equity compensation that give employees the right to receive company stock at a future date, subject to certain conditions. The company may offer RSUs to employees instead of stock options.

Cash bonuses: The company may provide cash bonuses to employees as an alternative form of compensation.

Enhanced benefits package: The company may offer an enhanced benefits package to employees, such as increased vacation time, additional health insurance options, or other perks.

It’s important to note that the specific alternative benefits offered by a company in the event of a cancelled IPO can vary depending on the company’s policies and financial situation.