Private company stock secondary transactions have significantly increased over the last several years due to market trends, such as delayed initial public offerings (IPOs) for private companies, increased demand for liquidity among employees and early investors, the growth of secondary market platforms, amplified demand for private market investments by institutional investors, and ongoing economic volatility and its impact on secondary market pricing, to name a few. Auditors and the Securities and Exchange Commission (SEC) have heightened their level of scrutiny related to how these secondary transactions should factor into common share valuations and this has resulted in a greater need for formal guidance on how to account for these transactions in the context of private company stock valuations.

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