Many private companies are facing tough times, with the coronavirus effect rippling through the economy and disrupting global markets. Founders and their investors are having to make difficult decisions to ensure they can stay afloat, and re-emerge with the ability to continue scaling.

But the unprecedented constraints we’re experiencing are also helping to breed creativity. For those companies that are willing and able to adapt and reinvent themselves, the current environment is also offering opportunities to rethink their approach. 

A recent note from an investor group to their founders and CEOs called coronavirus, “The Black Swan of 2020”, and warned companies to “brace themselves for turbulence”.

They also asked founders to question every part of their business, including the availability of cash. Headcount is a natural stress point for any company’s finances, and with private financings likely to decrease, offering equity in the form of share options is increasingly becoming a credible solution.

Although share options have long been considered a cost-effective component in the reward toolkit, now more than ever, they could offer a great way to defer cash salary or bonuses.

Opportunities for your company

•Protect cash flow by deferring spend via equity on generous terms instead of cash now

•Retain talent with a strong equity offer not available elsewhere

•Enourage an entrepreneurial spirit and maintain motivation towards long-term goals

Benefits for your employees

•Potential to see greater gains with share options over immediate cash 

•Some possible tax-savings, depending on the share plan structure 

•Feel more invested in the business and part of its future 

So, if the idea of offering equity as a solution has inspired you but you don’t know where to start, get in touch with our Ayaz Quraishi at Shareworks by Morgan Stanley for an informal chat.

Written by: Shareworks by morgan Stanley