Quote:
Originally Posted by fotze2
Thanks. No I know what I’m talking about but way less than before your info.
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Short: your risk for getting screwed on these shares is low. Long run can be relatively valueless or holy #### they're valuable.
Longer:
Many companies scaling up need as much cash as possible.
To save cash, they sometimes give you a part of the company instead of equal or greater payment value in shares vs them paying you cash and paying debt servicing costs or control to a potential takeover group to borrow more.
Different classes of shares means the ability to compensate certain groups of people properly vs other groups of people (ie: founders vs high level employees vs low level employees; and dilution). Sometimes it's trading money for control.
Private shares situations like this may ultimately end up with severely inaccurate cost of shares on an investment statement. To avoid significantly overpaying tax, you have to make sure you have the right paperwork to prove and calculate the correct cost of the shares.