Some shareholders of private company stock options face a tax issue when the company has an IPO or other liquidity event.
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But analysts expect former parent company eBay, which retained a 30% stake in Skype, to profit from the liquidity event, too.
For stockholders, exercising the stock early, before a liquidity event, adds risk.
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Darn, we were so very close to that magical liquidity event!
Separately, reports have surfaced that the Federal Reserve recently issued a letter to Bank of America asking what its plans are should another liquidity event emerge.
The independent-minded people who contact us have diligently saved during their accumulation years and many are having a big liquidity event that will boost their wealth significantly.
In particular, a GRAT may appeal to people who have a liquidity event, such as a sale, on the horizon, or expect depreciated assets to recover during the trust term.
For most investors in technology start-ups, the typical approach entails a five-year investment horizon that will enable the company to build market share and a sizeable customer base, making it ripe for a high-value liquidity event.
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So is it that Obama Ventures LLC has bought a troubled asset, added value by subsidizing sales and helping to thwart competition, and now has its eyes fixed ahead on the liquidity event of the new General Motors IPO?
Third, employee retention may be an issue, at least following the IPO after the big gains are realized (particularly when stock vesting allows employees to cash-out upon the occurrence of a qualifying liquidity event, as in the case of the Zynga IPO).
In Europe, for instance, responsibility for bank supervision, and the provision of liquidity in the event of a bank panic, will officially remain with national regulators and national central banks.
This reality, which was much in evidence in the recent case of the Mexican tesobonos, tends to create an incentive on the part of Western governments to intervene in the event of a liquidity crisis that threaten to harm scores of prominent firms and possibly thousands of investors.
Expectations exist that the IMF and central banks will do what it takes to shore up liquidity in the global economy in such an event.
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In the event that we do not have sufficient liquidity, we may be required to seek additional capital, reduce or cut back our operating activities or otherwise alter our business strategy.
The conventional wisdom judged the efficiency of markets by the accuracy of individual prices rather than on their robustness in the event of shocks or their vulnerability when liquidity dries up.
"In the unlikely event that a generalised shortage of offshore renminbi liquidity emerges, the Bank will have the capability to provide renminbi liquidity to eligible institutions in the UK, " he said.
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