In this content series, we examine exercising options and equity throughout the career-planning lifecycle. Previous articles discussed factors to consider before joining a company  and during the time employees work at the company . Now, it’s time to take a closer look at the final stage and offer advice for those who decide to leave.

Just because you leave a company doesn’t mean you stop believing in its ability to make it big and in your chances of benefiting from that. This is the money time! Research the company’s status (using specific tips listed below) to make an informed decision. Robyn Capital’s options analysis tool can quickly present your options’ current value. Once you have a good understanding of your options’ value, choose one of the following paths:

1. Exercising your options

You can either exercise your options independently or use a financing solution like Robyn Capital. If the company doesn’t make it, you don’t risk your hard-earned money to purchase your shares; if it continues to succeed, your profit will grow accordingly.

By following the financial terms specified in your options plan, you can purchase your shares at the set price and turn them into a tangible part of the company that’s ultimately yours. If and when the company goes public or is acquired, your shares may turn a profit.

2. Selling your shares – should you cash out today?

Secondary markets offer option holders a way to sell their shares pre-IPO or exit. Marketplaces like Valoo.io or Elephant.io are some of the options.

Upside: This route enables you to turn shares into cash without waiting for the company to make it big.

Downside:

1. A sale isn’t guaranteed – sometimes there aren’t any available buyers, and when there are, the board would have to approve your sale, as they have a Right of First Refusal to purchase your shares.
2. You give up on the potential upside of your shares in case the company does end up making it big.
3. You may have to pay quite a bit of money in taxes, especially if two years have not yet passed from the date you received your grant, in which case you are not eligible for meaningful tax benefits under section 102.

3. The best of both worlds – the Hybrid Solution

Liquidation financing, or a “Robyn Deal,” as we like to call it, combines the best of both worlds. It involves financing your option exercise while providing an additional meaningful amount that cashes out some of your “on paper” value today, while you also keep 100% of your shares and most of your future upside.

You can sell your shares or opt for liquidation financing at any given moment, just as long as you have exercised your options and now own shares in the company. However, it is always recommended to hedge your risk as soon as possible.

Additional factors to consider

• Know your options’ expiration dates, and don’t lose track of it. You have a few months to decide whether or not you wish to exercise your options and taking this time can be incredibly beneficial but also a little risky. Ensure that you don’t forget to make that decision on time. Set reminders long enough in advance so you can make this decision calmly and effectively.

•  Understand the meaning of being “in the money.” When the market price per share exceeds your exercise cost per share, you are “in-the-money.” To understand the market price per share you can ask your finance department for the company’s Fair Market Value (FMV), which we’ve discussed in detail earlier in this article series. To do so, you must continue to follow the company’s growth and progress. Read the latest news, see if any meaningful talent has left or joined the company (that’s what LinkedIn is for, and speaking of which, you can also track the insights section on your company’s LinkedIn page to follow its growth), follow fundraising updates through websites like TechCrunch, and more. This should help project the company’s chances of succeeding, allowing you to make a more informed decision.

• Follow the company’s market and competitors. Learn if other services are increasing in popularity or the other way around. See if new players joined the field, which could indicate fierce competition but also let you know that this market is on the rise. Another suitable method is to follow the performance of competitors or companies from the same field that are already public.

• Study industry benchmarks. As discussed in a previous article, startups take an average of 13 years to go public or reach other meaningful milestones. Zoom in on your specific field to gather further information and understand where the company should be.