How to Purchase Common Stock in a Private Corporation

by Mark P. Cussen

Stock in a private corporation does not trade on a public exchange. However, this type of stock can be every bit as valuable as publicly traded shares. But buying and selling private shares is somewhat more involved than placing trades on an exchange and may require expertise in a few different categories. Be sure to get your i's dotted and your t's crossed before attempting this type of transaction.

Talk to the person selling the stock and see what price they want per share. This price is not absolute; you have some room to negotiate. But you should look at the company's financial condition and be able to valuate the stock mathematically for yourself.

Hire a qualified appraiser or CPA to value the stock if you are unable to come to an agreement or value the stock yourself. Most CPAs are trained to do this sort of thing; if yours doesn't, he or she can probably point you to someone that does.

Hire a broker to carry out the transaction for you. Even though private stock is not regulated by the SEC, the mechanics of the transaction should probably still be handled by a professional.

Hire a securities attorney to oversee the entire process and to put the transaction into effect, if you can't find a broker to do it. The attorney should draw up all the paperwork and be present when the money changes hands: this is to have legal protection, for both you and the seller.

Items you will need

  • Someone willing to sell some or all of their shares of stock in a private company

References

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