Buying Private CompaniesHow does one go about buying stock from private companies prior to their public offer?
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One usually doesn’t — you can sometimes buy shares of “will eventually be public” companies on private share exchanges, which got a lot of attention largely because of Facebook — the ones I’ve heard of are SharesPost and SecondMarket. Both are probably going to suffer greatly now that facebook is coming closer to the public markets, and this kind of stuff is really much more suited to institutional investors — after all, even if it’s possible to buy shares on the secondary market that doesn’t mean that you get any information at all about the company, for some of these companies you wouldn’t even know their sales numbers, let alone profits or margins or strategic plans. And if they never go public — which some of them will not — there may not ever develop a market for the shares even on the secondary markets, which means you might not be able to sell.