INCREASE FINANCIAL FLEXIBILITY
If you’re seeking financing to exercise your private company options, the Lexus stock option loan program can address your needs.
Lexus provides funding for current and departing employees of select VC-backed companies to enable them to exercise their stock options. Through a unique partnering agreement, Lexus provides employees with the cash required to exercise their options and participates in the upside if the stock gains value through a sale or IPO. Since the loan to the employee is non-recourse, if the stock becomes valueless, Lexus, not the employee, bears the loss. We provide a clear, straightforward, and employee-friendly approach to exercising stock options without financial stress.
For individuals who already own private company stock, Lexus can provide partial liquidity allowing the owner to recover capital while still retaining the potential upside from the stock.
KEY BENEFITS OF A NON-RECOURSE LOAN
EXERCISE TODAY WITH NO UPFRONT COSTS
High out of pocket expenses cause many option holders to delay exercising their options until an IPO or acquisition. If the option holder leaves his company before a liquidity event, valuable options may expire or there could be a substantially higher tax bill, since there are typically 90 days in which to exercise stock options before they expire worthless. The Lexus stock option loan program allows you to exercise your options and immediately receive all the advantages of direct ownership of the underlying shares.
PAY LESS TAX NOW AND LATER
The costs to exercise employee stock options get higher over time as your company grows. The longer you wait to exercise your options, the greater the costs may become. Exercising today enables long-term capital gains treatment on all of the appreciation on shares sold a year or more later. Qualifying for long-term capital gains can save you a considerable portion of net sale proceeds. This can lead to an enormous difference in your after-tax proceeds, and is therefore an efficient option.
NON-RECOURSE LOANS REDUCE RISK
Lexus loans are secured by the underlying shares of the exercised options. In most cases, if the loan cannot be repaid, the lender is only entitled to collect the shares and the borrower is without further liability. This usually reduces the borrower’s risk in comparison to personally funding the exercise and all associated taxes.