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Unformatted text preview: shares. Sale of the shares after the IPO result s in a taxable transaction for the entrepreneur and normally results in a capital gains tax liability. In a private sale, the entrepreneur can negotiate with the acquirer and may acquire cash, shares of the acquirer, or a combination. In addition, the en trepreneur can negotiate how the risk of subsequent performance of the venture will be shares with the acquirer. For example, if the entrepreneur is optimistic about sales or profitability, the entrepreneur can negotiate a contingent payment that is tied to subsequent performance. In some cases the exchange of shares of the venture for shares of the acquirer may be treated as not generating any immediate tax liability for the entrepreneur....
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