How private company share transactions work

Transferring shares in a privately held company is a documented, multi-party process. It is slower and more conditional than buying a listed security, and it can stop at any stage.

The parties involved

• The selling shareholder, who holds existing shares or an interest in them.
• The prospective buyer, who must satisfy eligibility and jurisdictional requirements.
• The company, whose constitutional documents govern whether and how a transfer may occur.
• Advisers and, in some structures, an intermediary entity or nominee.

Typical sequence

• An enquiry establishes what the buyer is looking for and whether it is feasible.
• Eligibility and jurisdiction are reviewed against the requirements of the specific transaction.
• Availability is checked — whether a shareholder is genuinely seeking liquidity at that moment.
• Indicative terms are discussed, including price, size and structure.
• Documentation is prepared and reviewed independently by the buyer.
• Consents, waivers or rights of first refusal are addressed where the company's rules require it.
• Settlement occurs and the register or relevant records are updated.

Common reasons a transaction does not complete

A transfer may not proceed because consent is withheld, because a right of first refusal is exercised, because the parties cannot agree terms, because eligibility requirements are not met, or because the seller withdraws. None of these outcomes is unusual, and no stage of the process should be treated as certain until the transaction has completed.