I fully understand how the RSU work at a public company, but how equity and more specifically the stock options work at a private one (pre IPO) is completely unclear to me. Do you have to wait for the company to go public to exercise the stock (so you wait for the exit)? Can you exercise your stock prior? If that is the case (meaning you can exercise it prior to exit) how is the stock valuated at a private company?
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Usually your given options, and you can exercise them to obtain stock in the private company. Although there is a potential for tax implications. You usually cannot sell the stock until there is some liquidation event, such as the company going public or getting acquired. Companies giving out stock options usually have various valuations but one that matters is the 409a which I think is what's used for tax purposes, and you can also keep an eye on what the funding rounds look like to have an idea of what the stock is actually worth.