Glossary

A French employee stock option scheme granting the right to subscribe to new shares at a fixed price. Unlike stock options in other jurisdictions, BSPCEs are typically subject to a vesting schedule and benefit from a favorable tax treatment in France upon sale, provided certain holding conditions are met.

A secondary transaction in which multiple shareholders of the same company sell their positions simultaneously to a single buyer. Block transactions allow the buyer to acquire a meaningful stake in one operation, reducing per-share transaction costs and legal friction — which generally results in better pricing and faster execution for all sellers involved.

A document — typically a spreadsheet or managed through dedicated software — that records the full ownership structure of a company: who holds shares, of what class, at what valuation, and subject to what conditions. Cap tables are essential in secondary transactions to verify share class, transfer restrictions, and existing rights of other shareholders.

The most basic form of equity in a company, typically held by founders, employees, and early investors. Unlike preferred shares (usually held by institutional investors), common shares carry no liquidation preference or anti-dilution protections. In a secondary sale, common shares are often sold at a discount to the latest preferred share valuation to reflect this structural difference.

A provision in a shareholders' agreement allowing a majority shareholder (or group of shareholders) to compel minority shareholders to join in the sale of the company on the same terms. Drag-along rights are designed to facilitate clean exits and prevent minority shareholders from blocking a transaction. They do not typically apply to secondary sales of individual positions.

A contractual period during which a shareholder is prohibited from selling their shares. Lock-ups are common after fundraising rounds or IPOs and are typically set for 90 to 180 days. If your shares are still subject to an active lock-up, a secondary sale may not be legally possible until it expires — though in some cases waivers can be negotiated.

A contractual right — typically held by the company or existing shareholders — to purchase shares before they can be sold to a third party. If you intend to sell, you must first offer the shares to the ROFR holders at the same price and terms as your proposed transaction. If they decline or fail to exercise within the agreed period, you may proceed with the sale. Newfund handles the ROFR process on your behalf.

The private sale of existing shares between two parties — as opposed to a primary transaction, in which new shares are issued to raise capital. In a secondary transaction, no new money enters the company and its operations are entirely unaffected. The seller receives liquidity and the buyer acquires an existing stake. Secondary transactions require compliance with the company's shareholders' agreement and may be subject to ROFR, board consent, or other transfer restrictions.

Contractual rights granted to employees or advisors to purchase shares in a company at a pre-set price (the strike price or exercise price) at a future date, subject to a vesting schedule. Options must generally be exercised before they can be sold. In a secondary transaction, unexercised options are typically not transferable — only exercised shares can be sold.

The fixed price at which a stock option or BSPCE holder is entitled to purchase a share. Determined at the time of grant, the strike price is typically set at or near the fair market value of the share on that date. The lower the strike price relative to the current value of the company, the greater the potential gain upon exercise and sale. In a secondary transaction, the strike price matters because options must usually be exercised — and the exercise cost paid — before the resulting shares can be sold.

A protective provision allowing minority shareholders to join a sale initiated by a majority shareholder on the same terms. Unlike drag-along rights, tag-along rights cannot be used to force a sale — they only allow minority shareholders to participate if a majority shareholder is selling. They protect minority holders from being left behind with an unknown new majority partner.

The process by which an employee progressively earns the right to their shares or options over time, typically on a monthly or quarterly basis over a 3 to 4 year period. Most vesting schedules include a one-year cliff — meaning no shares vest during the first year, after which a block vests at once. Only vested shares can be sold in a secondary transaction.

The voluntary relinquishment of a contractual right. In the context of secondary transactions, a waiver most commonly refers to the waiver of a Right of First Refusal (ROFR): the eligible parties formally agree not to exercise their right to purchase, allowing the seller to proceed with the transaction. Waivers may also apply to lock-up periods or board consent requirements in certain circumstances. Obtaining waivers is a standard part of the secondary closing process.