Unlocking Liquidity and Mitigating Risk
David's portfolio is heavily weighted towards his company's stock and RSUs, creating significant illiquidity. If his company is acquired with a lock-up period or experiences a downturn before Series A, accessing his capital could be severely restricted, impacting his financial flexibility and future investment opportunities. He needs to understand the true liquidity of his holdings, considering shares available for public trading, to make informed decisions.
By using the Free Float Calculator, David can determine the percentage of his company's stock readily available for trading on the open market. This allows him to quantify the actual liquidity of his holdings. For example, if the calculator reveals only 20% of the total outstanding shares are free float, he understands the potential difficulty in liquidating a significant portion of his shares quickly, even if there's initial acquisition interest. This prompts a discussion with his financial advisor about diversification and alternative liquidity strategies.
The Free Float Calculator uses the total outstanding shares and subtracts restricted shares and shares held by insiders to determine the number of shares available for public trading. This information is then used to calculate the free float percentage.
$250,000 reduction in potential losses by strategically diversifying illiquid assets.
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