Before a secondary sale is announced to employees or investors, war-game the story. Write one fact sheet that says who can sell, how much, at what price, why now, and what the company receives, then check that every message to employees, investors, and the board tells the same story. Look hardest at who sells the most and how the price will be read. Paste the term summary, the allocation by group, the eligibility rules, and the draft messages into one request. Instruct Pingpong to flag inconsistencies, fairness questions, and statements that imply more than the facts support. Review your written answers in a second round.
Counsel owns securities law, disclosure, and investor rights. Pingpong reviews consistency and readiness, and it does not give legal, tax, or financial advice.
This page is for chief executives, finance leaders, and directors preparing to approve or explain a secondary sale. Executive starting points live under Pingpong for executives.
Write one fact sheet
- Sellers: who is eligible, and the total each group may sell.
- Price: the figure, how it was set, and how it compares with the last priced round.
- Why now: the reason for the sale, in a sentence employees would accept.
- Company proceeds: usually none, which every message should say plainly.
- Investor rights: rights of first refusal, co-sale, and any waivers the board must approve.
- Timeline: when people decide, and when they are paid.
Read it the way each audience will
Employees will compare their allocation with the founders' and executives', and wonder whether the price says something about the company's value. Existing investors will look for their rights and for what founder selling says about conviction. Directors will want to know that every message matches the fact sheet, that the allocation can be defended, and that managers know what they can and cannot say when someone asks whether to sell.
A worked example
This example is illustrative and does not describe a customer. An outside fund offers to buy $30 million of common stock in a 400-person software company, at a price 15% below the last preferred round. The draft plan lets the founders sell $12 million and executives $6 million, and employees with at least three years of service sell up to 15% of their vested shares, from a pool of $12 million. The draft employee email calls the sale "a strong vote of confidence in our future."
The chief executive pastes the term summary, allocation table, eligibility rules, and the three draft messages.
A useful pass finds that founders would take 40% of the sale, and the employee email does not mention founder or executive amounts. The three-year rule excludes about 60% of employees. The email never says the company receives no money, and several sentences read as if the company is raising. The price is below the last round, which employees may read as a lower valuation, and nothing explains the difference between common and preferred stock. The price may also matter for how common stock is valued for future option grants, a question for counsel and the valuation provider. The investor letter omits rights of first refusal and co-sale. Managers have no guidance for employees who ask whether they should sell.
The revised plan caps each founder's sale at a fixed share of holdings, which lowers the founder total to $7 million. Executives stay at $6 million. Eligibility opens to employees with two years of service, and the employee pool rises to $17 million, keeping the total at $30 million. Every message states the founder and executive amounts, that the company receives no proceeds, and why the price differs from the last round, in wording counsel approves. "Vote of confidence" comes out. The investor letter covers their rights and the timeline. The board reviews the fact sheet, the allocation, and each message before approving any waivers. Managers point questions to a written FAQ and suggest employees talk to their own tax or financial advisors.
If the company is also considering a primary raise, see decide whether the company is ready to fundraise.
A request you can copy
Below are the term summary for a secondary sale, the allocation by group, eligibility rules, and our draft messages to employees, investors, and the board. Build a one-page fact sheet and check every message against it. Flag differences in amounts, price explanations, or timing. Identify fairness questions in the allocation and eligibility. Flag statements that imply company proceeds or a valuation view the facts do not support. Mark legal, disclosure, and investor rights questions for counsel. Do not give legal, tax, or financial advice. Stop there so we can answer in writing, then review our answers.
How Pingpong runs the review
The web review app sends your request through several models in order. Each later model receives the original request and every earlier answer, with instructions to assess the work so far. For the steps inside the app, see running your first review.
What a model can't review
A model does not know your investors' agreements in full, how employees talk among themselves, or how the market will read the price. Counsel owns disclosure and rights, and the board owns approval.
When the sale goes to the board, see war-game a decision before the board meeting. More guides live under work decisions before you commit.