Running a company's first ESOP buyback
A walkthrough of how a company offers liquidity to vested ESOP holders through a structured buyback. This is a hypothetical scenario, not a real company's account.
Deciding to run a buyback
Consider a growth-stage company several years post-Series A, with a group of early employees holding vested ESOPs and no clear path to liquidity before a future exit. The company decides to run a buyback, offering to purchase a portion of vested options at the current fair market value. Doing this without a structured process typically means the company's legal team manually drafting ROFR notices to existing shareholders, chasing waiver signatures by email, and tracking who has accepted the offer in a spreadsheet — with real risk of a missed notice or an inconsistent offer across employees.
- 1The company sets the buyback terms — eligible employees, price per share, and window to respond
- 2ROFR notices go out to existing shareholders and waivers are collected by Incentiv's transaction team
Executing and settling
Once employees accept the offer, funds need to move from the company to each participating employee, share transfers need to be filed, and the whole process needs a documented trail in case of a later audit or dispute. Handling settlement without escrow means the company and employees are relying on trust rather than a secured process — and without a digital audit trail, confirming who signed what and when becomes a manual document search.
- 1Participating employees accept the offer and their share transfer is initiated
- 2Funds are held in escrow until the transfer is confirmed, so no party is exposed during settlement
- 3The completed buyback — every notice, waiver, and approval — is logged in one audit trail
Is this describing a real company’s buyback?
No. This is an illustrative, hypothetical walkthrough describing a common ESOP buyback workflow — not an account of a specific named company.
Does Transact handle ROFR (right of first refusal) as part of a buyback?
Yes — Incentiv's transaction team manages ROFR notices to existing shareholders and waiver collection as part of the same process used for buybacks and other secondary transactions.
Considering a buyback for your team?
Book a demo and we'll walk through how a buyback would run for your company's cap table.