How to sell shares in a UK private company: every route to liquidity compared
Getting into a startup takes seconds. Getting out can take a decade. That gap, which we explored in 'Getting into a startup takes seconds, getting out can take a decade', is one of the biggest frictions in UK early-stage investing. Angels recycle capital slowly, employees wait years to see value from options and founders carry concentrated personal risk.
The good news is that the set of routes to liquidity has grown. The less good news is that each route comes with its own trade-offs. This guide compares nine of them side by side, from a simple private sale, to a sale of the whole company.
Why liquidity matters
Liquidity in the context of a startup or scaling business, is the ability to turn a holding into cash without waiting for a sale of the whole company or a listing. For a UK private company, it matters for three groups:
Early investors, who want to recycle capital into new companies and may face fund life limits.
Employees, whose options are part of their pay but often cannot be sold.
Founders, who may have most of their wealth tied up in one company.
Better liquidity can make a company more attractive to all three. A sale of the whole company, Route 9 below, is the traditional exit. The other eight routes exist because that exit can take many years to arrive.
Route 1: a private sale to another investor
The simplest route is a direct sale of existing shares to a new or existing investor.
How it works: a seller finds a buyer, agrees a price, completes a stock transfer form and the company updates its register of members.
Strengths: flexible, quick when a buyer is ready, no platform needed.
Weaknesses: finding a buyer is hard, pricing is opaque, the board may need to approve, pre-emption rights may give existing shareholders first refusal, stamp duty at 0.5 per cent applies to transfers for more than £1,000 and legal and advisory fees add to the cost.
Best for: occasional, negotiated sales between people who already know each other.
Route 2: a company buyback
The company buys back shares from a shareholder and usually cancels them.
How it works: buybacks must follow the Companies Act 2006 procedure. They are normally funded from distributable profits, and private companies can in some cases fund them from capital if strict conditions are met.
Strengths: the company controls the process, and it can tidy up the cap table, for example when someone leaves.
Weaknesses: most startups are loss-making and lack distributable profits, cash spent on buybacks is not spent on growth, and the tax treatment for the seller can differ from a normal sale.
Best for: profitable or well-funded companies managing leavers or small holdings.
Route 3: a secondary sale alongside a funding round
When a company raises money, new investors sometimes buy some existing shares as well as new ones.
How it works: part of the round is used to buy shares from founders, employees or early investors, usually at or near the round price.
Strengths: a credible price set by the round, and a single process for everyone.
Weaknesses: only happens when there is a round, and lead investors often limit how much can be sold so they are not seen to be cashing out insiders.
Best for: later-stage companies raising competitive rounds.
Route 4: a tender offer
A tender offer lets many shareholders sell at once to one or more buyers, at a set price, over a set window.
How it works: the company or a lead buyer sets a price and an amount, eligible shareholders choose how much to sell, and sales are scaled back if demand exceeds the cap.
Strengths: fair, organised, good for employees.
Weaknesses: needs a well-capitalised buyer and significant legal work, so it suits larger companies.
Best for: scale-ups offering staff liquidity at scale.
Route 5: crowdfunding platform secondary markets
Some equity crowdfunding platforms have run secondary markets where their investors can sell holdings in companies raised on the platform.
How it works: investors list holdings and other platform investors buy them, often during set trading windows and often through a nominee structure.
Strengths: familiar for crowd investors, low minimum amounts.
Weaknesses: limited to that platform's investors and companies, thin trading in many holdings and prices that can sit well below the last round.
Best for: crowd investors seeking a partial exit.
For context on how crowdfunding has performed over time, see what ten years of equity crowdfunding returned to founders and backers.
Route 6: PISCES
PISCES is the UK's regulated framework for intermittent trading in private company shares, running as a sandbox to June 2030.
How it works: an FCA-approved operator runs a trading event, usually an auction, in which eligible investors buy shares from existing holders. The company decides when, who and the price range.
Strengths: regulated, company controlled, exempt from stamp duty and SDRT, and option-friendly thanks to the EMI and CSOP amendment rules.
Weaknesses: closed to mainstream retail investors, requires disclosures and legal preparation, and is still new.
Best for: companies with many shareholders who want to sell and a valuation they can stand behind.
Our complete guide to PISCES covers the detail, and our guide for employees covers options.
Route 7: tokenised shares
Tokenised shares record ownership, or an interest in shares, on a distributed ledger. In theory this makes transfers faster and cheaper and opens the door to more continuous trading.
How it works: the company or a platform issues tokens that correspond to shares, usually through a mirrored register or a nominee structure, and transfers happen on the ledger.
Strengths: a cleaner record of ownership, programmable rules for who can hold and transfer, and the potential for wider access over time.
Weaknesses: legal title still follows the register of members, trading on a ledger may need FCA permissions, and liquid venues for UK private company tokens are still scarce.
Best for: companies building towards a digital-first cap table and regular investor liquidity.
Read what SEIS investors and founders can actually do with a tokenised shareholding today and does your tokenised share need cryptoasset permission? before you commit.
Route 8: an employee ownership or benefit trust
A trust holds shares on behalf of employees.
How it works: an employee ownership trust can buy a controlling stake from existing owners, usually paid for out of the company's future profits. An employee benefit trust holds shares for employee share schemes.
Strengths: keeps the company independent, rewards staff and gives owners a structured way to sell.
Weaknesses: needs steady profits to fund the purchase, involves specialist legal and tax work, and suits only some businesses. Tax rules in this area are specialist, so take advice.
Best for: established, profitable companies whose owners want to sell to their staff.
Route 9: a sale of the whole company or a listing
All shareholders sell together, either to an acquirer or by listing on a stock market through an IPO.
How it works: a trade sale or private equity buyer acquires the company, or the company floats its shares on a market.
Strengths: everyone exits, or gains a market for their shares, at the same time and at a price set by the deal or the market.
Weaknesses: timing is outside most shareholders' control, it can take many years to arrive, and drag-along terms may require minority holders to sell.
Best for: companies on a path to a full exit. It is also the benchmark against which every other route is measured.
The routes at a glance
Route | Who controls it | Cost and effort | Best for |
1. Private sale | Seller and buyer, subject to board approval and pre-emption rights | Low set-up cost, 0.5% stamp duty above £1,000, plus legal fees | Occasional, negotiated sales between people who know each other |
2. Company buyback | The company | Needs distributable profits or strict conditions, under the Companies Act 2006 | Profitable or well-funded companies managing leavers and small holdings |
3. Secondary alongside a round | Lead investor and company | Folded into the round's process | Later-stage companies raising competitive rounds |
4. Tender offer | Company or lead buyer | Significant legal work and a well-capitalised buyer | Scale-ups offering staff liquidity at scale |
5. Crowdfunding secondary market | The platform | Low minimums, but thin trading and prices below the last round | Crowd investors seeking a partial exit |
6. PISCES | The company, with an FCA-approved operator | Disclosures and legal preparation, exempt from stamp duty and SDRT | Companies with many shareholders who want to sell |
7. Tokenised shares | Company and platform, with legal title following the register | Platform set-up and possible FCA permissions, few liquid venues | Companies building a digital-first cap table |
8. Employee ownership or benefit trust | Trustees and the company | Specialist legal and tax work, funded from future profits | Established, profitable companies selling to staff |
9. Sale or listing | The board, and the acquirer or market | Highest cost and the longest timeline | Companies on a path to a full exit |
A word on SEIS and EIS
If investors claimed SEIS or EIS relief, an early sale can cost them that relief. Shares generally need to be held for at least three years to keep the income tax relief and the capital gains exemption. Any liquidity plan should check when investors' qualifying periods end. Our piece on tokenised shares and EIS relief covers the interaction.
How to choose
Ask four questions:
Who wants to sell? One angel, a handful of leavers or dozens of employees point to different routes.
Is there a credible price? A recent round or a robust valuation makes every route easier.
How much control does the company want? PISCES and tender offers keep control with the company, open markets do not.
What will it cost in time and fees? A private sale is cheap but slow to arrange, a tender or PISCES event needs more preparation.
These are questions to take to your legal and tax advisers. They are not a recommendation of any route.
Key points
UK private company shareholders now have at least seven routes to liquidity.
Private sales are flexible but opaque and carry stamp duty.
Buybacks need distributable profits or strict conditions to use capital.
PISCES offers regulated, company-controlled, stamp duty free trading events.
Tokenised shares are promising but legal title still follows the register.
Where to go next
If you are a founder weighing PISCES or a tokenised cap table for your company, talk to us about whether your business is ready. shawn@tokenisingstartups.com
If you advise or invest in growth companies and want to reach founders thinking about these options, ask about becoming a Tokenising Startups partner. mark@tokenisingstartups.com
To keep up with new liquidity routes as they open, subscribe to the Tokenising Startups newsletter.
Last reviewed: October 2026. This guide is general information, not legal, tax or investment advice.
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