Why employee education is the missing piece in Secondaries

The gap between demand and understanding

According to Ledgy's State of Equity 2026 report, four out of five employees at UK companies want to take part in a secondary share sale, but almost half don't know what one is.

That gap sits at the centre of a shift happening across scale-ups right now. Our research found that 75% of businesses say they're likely to run a secondary share sale in the next 12 months, and 80% of employees say they'd like to participate. Yet 45% admit they don't actually understand what a secondary share sale is.

Secondaries have become an increasingly popular option for scale-ups globally, offering pre-exit liquidity to early investors and employees at a point when traditional exit routes are taking longer to arrive. In the UK, they’re also getting new infrastructure: since 2025, a regulated framework for trading private company shares has been in place, alongside the company-run model most scale-ups know.

Demand is clearly there; what's missing is the understanding to match it. So why the disconnect? This article looks at what a secondary is, why they're becoming so common, the two main routes to running one and how companies can make sure employees understand what's involved and feel confident taking part.

How do secondaries work for private company shares?

A secondary share sale is the transfer of shares that already exist, rather than the creation of new ones.

That's the key difference from a primary raise. In a primary round, like a Series A, a company issues new shares in exchange for capital, and the money raised goes to the business. In a secondary sale, existing shareholders, often early employees or founders, sell shares they already hold to another buyer. No new shares are created and no new capital is raised. The sale simply changes who owns the shares.

There are two main ways to run a secondary:

• Company-run secondary: In a company-run secondary, the company sets the terms: who can sell, how much, at what price and to whom. The buyer might be an existing or new investor, sometimes a strategic investor brought in ahead of a planned IPO, but it can also be the company itself, through a buyback (though strictly that is a purchase of its own shares rather than a transfer, and comes with its own Companies Act requirements).
• Market-based secondary: In a market-based secondary, shareholders sell to outside buyers through a regulated trading venue, such as those now operating under the UK’s PISCES regime.

We've covered the full mechanics of how these deals work in our guide to secondaries.

How your equity type changes the process

What's less often covered is how the type of equity someone holds changes what they actually need to do to participate. For employees, there are three main scenarios:

• Options: Employees have to exercise their options and acquire underlying shares, before they can then sell those shares (often exercising and selling in one step). Whether they're allowed to do this specifically for the secondary depends on the wording of the option plan itself, so this is the first thing to check (especially if there are tax-advantaged options involved).
• RSUs: These need to vest as part of the secondary, or the Board, or Remuneration / Compensation Committee needs to accelerate vesting at its discretion. Only once the underlying shares are issued or transferred can the employee sell them.
• Restricted stock/stock awards: These need to vest and/or any transfer restrictions attached to them need to be lifted before a sale can go ahead. Much depends on the terms of the plan rules and shareholder agreements.

The process looks different depending on the type of equity an employee holds, with tax adding another layer to consider.

Why secondaries are becoming more common

The wider exit market is one reason secondary share sales are becoming more common.

Traditional exit routes are constrained. UK private equity exits reached £20.9 billion in the first four months of 2026, but 62% of those were sponsor-to-sponsor deals, one fund selling to another, rather than a genuine exit through an IPO or trade sale. Volatility and uncertainty across equity markets and economies globally are testing valuation confidence and making public listings harder to execute. In 2024, 88 companies delisted or transferred their primary listing from the London Stock Exchange (LSE), against just 18 new listings, a net loss of 70, the LSE's largest net outflow since the financial crisis, according to EY. Fewer genuine exits mean growing pressure on investors and management teams to find liquidity opportunities elsewhere.

That shift is also reflected in how companies are approaching IPOs. In our State of Equity 2026 report, 25% of companies said that having "other ways to return liquidity to shareholders" was a reason not to pursue an IPO, up from c18% the year before. Businesses aren't just delaying public listings, they're actively building alternative routes to liquidity.

This leaves an obvious question: how do shareholders realise value without needing to wait for an acquisition or an IPO?

Company-run secondaries as the practical alternative

Company-run secondaries are that alternative. For investors, they're a way to rebalance private market portfolios and access liquidity in an asset class that's traditionally hard to exit. For companies, they're increasingly used to prepare for a smoother IPO further down the line, tidying up the cap table or bringing in new investors with public market experience, without committing to that exit path just yet. A secondary offers a path to liquidity that can benefit founders, early investors and employees alike.

Employees want liquidity options. In an environment where companies stay private for longer and IPOs feel increasingly distant, employees who joined early may be sitting on significant paper wealth they can't access for the moments that actually need it, buying a home, paying for education, or simply diversifying beyond a single, illiquid asset.
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PISCES: new infrastructure for private share trading

In June 2025, the FCA published final rules for PISCES (the Private Intermittent Securities and Capital Exchange System), a five-year sandbox for trading private company shares. Unlike a stock exchange, PISCES runs on periodic trading events rather than continuous trading. The company can decide when they happen, who can buy the shares, any price limitations and what information is available to the buyers. Trades on PISCES are also exempt from stamp duty and SDRT. JP Jenkins, our partner, is one of the FCA-approved PISCES operators.

Communicating a secondary

For most employees, equity compensation is abstract. Options and RSUs live on a dashboard, a number that moves but never quite feels real. A secondary changes that. It's often the first time equity stops being a projection and becomes real money in an actual bank account, proof that the late nights and long stretches of uncertainty built something with marketable value. Revolut's employee secondaries are a good example of this playing out at scale, giving employees a different perspective on their equity beyond what it was worth on paper.

Handled well, that moment does more than reward people. Early joiners who go through a well-run secondary tend to become advocates for the equity scheme itself, lending the programme a level of credibility that company communications can't provide on their own. It can also help with retention, giving people a way to access some of their equity as their circumstances change without having to leave to do it.

Why education has to come before the offer, not during it

This is where the 45% knowledge gap becomes a real operational risk. If employees are learning what a secondary is at the same time as deciding whether to sell, they're making a significant financial decision under time pressure, potentially without fully understanding the financial and tax implications. Companies that pay attention to employee communication on equity in advance of a liquidity event will reap the rewards when it comes to that secondary sale: better-informed employees, fewer questions, and greater engagement with equity ownership and what it means.

What good employee communication looks like

Good employee communication is proactive, educational, and structured, and it starts well before any selling window opens. In practice, that means:

• A clear, upfront explanation of what's on offer and why, before employees have to decide anything.
• An exact timeline: when the window opens, when it closes, and when they should expect to see money land.
• A plain explanation of how the cash actually moves, from buyer to company to their account.
• Enough time and information for employees to speak to their own financial adviser before they commit.
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EMI and CSOP option holders need extra clarity

Holding an EMI or CSOP option isn’t the same as holding a share. To take part in a secondary, option holders usually have to exercise and sell at the same time, and the option agreement has to permit exercise for the purposes of a secondary. That’s the first thing to check. Get the timing or procedure wrong, and what should be a capital gains outcome can turn into an income tax charge. For CSOP, exercising within three years of grant generally loses the relief outside specific exceptions. For EMI, a disqualifying event starts a 90-day clock.

PISCES adds its own steps. HMRC has published guidance on the tax treatment of employee shares traded through PISCES, and EMI and CSOP options can be amended to allow exercise for a PISCES trading event without losing their tax-advantaged status (in accordance with this guidance). In practice this can mean employees signing an updated option agreement, which is one more reason the explanation has to come before the window opens. None of this makes a sale tax-neutral, so employees should take their own advice.

Treat your option holders like investors, not just participants. Give them the same clarity you'd expect for yourself.
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What makes running a secondary difficult

If you're the person responsible for running this, none of the above is news. A secondary isn't as simple as granting equity and moving on.

Updating the cap table is the easy part. It reflects ownership but it doesn't do much to actually transfer it. Each secondary sale has to go through that transfer process itself: a share transfer agreement, a stock transfer form, stamp duty (0.5% of the price, usually paid by the buyer, on transfers over £1,000; trades on PISCES are exempt), an update to the register of member and new share certificates (with indemnities where the old ones can’t be found).

If the sale changes who counts as a person with significant control, the PSC register needs updating and Companies House notifying. A buyback works slightly differently: the company pays the stamp duty itself and files form SH03 (plus SH06 if the shares are cancelled). Where employees are exercising options to take part, there’s an extra step before the sale: exercise agreements, the allotment of new shares (with an SH01 filing) and, of course, tax. All of this depends on getting the right consents, particularly where pre-emption rights apply, and following the correct process, which takes time. And then there’s price discovery: private company shares have no clear market price, so the value is set with the help of valuation experts.

Layered on top of all that is the coordination: keeping the company, buyers, and your own admin process moving in step, while making sure nothing falls out of sync. It's a genuinely complex mix of legal, valuation, and administrative work, happening while employees are trying to make a significant financial decision in the middle of it.

It's manageable, but only with the right systems and the right people around you. This might be the first secondary your company has run, but it won't be the first one your partners and advisers have handled. Choosing people who've done this before is often what separates a smooth process from a stressful one.

Two routes to liquidity, one equity record

Everything above points to the same underlying wish: a controlled, repeatable way to offer liquidity, without rebuilding the process from scratch each time. For some companies, that means running their own sale; for others, it means giving shareholders access to a wider market.

Selling Windows: company-run secondaries inside Ledgy

Selling Windows, a new feature coming soon, is built to close exactly that gap. It lets you run a share sale as a structured process inside Ledgy, from setting eligibility and price through to recording the resulting transactions and updating the cap table, rather than coordinating it manually across emails and spreadsheets. You stay in control of who's eligible and who buys. Ledgy doesn't process payments, arrange trades or advise on price; those decisions stay with you and your advisers.
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JP Jenkins: a market route beyond the company

Not every company can, or wants to, fund a buyback, and not every shareholder’s timing fits a company-run window. For those cases, our partnership with JP Jenkins gives shareholders a route to buyers beyond the company. As an FCA-approved PISCES operator, JP Jenkins runs periodic trading events for private company shares, with the company still setting the parameters: when trading happens, who can buy and what information is shared.

The two aren’t competing options. Selling Windows covers the structured, company-run process; JP Jenkins gives shareholders a regulated market when they want liquidity beyond it. Both depend on the same groundwork: an accurate cap table, clean share plan records, and employees who understand what they hold.
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What this means for Ledgy customers

Together, that gives you:

• A clearer ownership journey. Employees can see that a company buyback isn’t the only possible route to liquidity.
• Flexibility when a buyback isn’t an option. A market route is available, subject to buyers and the company’s consent.
• One record across both. Plan administration, exercises and transfers are all reflected in the same cap table.

None of this is automatic. Whether a sale can go ahead depends on the articles, shareholder agreements, plan rules and whether there are buyers at the right price.
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Closing the gap for good

Demand for secondaries is real, growing, and unlikely to reverse while exit routes stay constrained and companies keep staying private for longer. The businesses that get ahead of this won't be improvising a new process every time a window opens; they'll have a system already in place for it, whether that’s a company-run window, a market route, or both.

The stat we opened with is the one worth holding onto: four out of five employees want this, and nearly half don't yet fully understand it. That's not a reason to hold back. It's the clearest case there is for starting education early. Get that right, and a secondary stops being something employees have to be talked through and becomes something they can engage with confidently.