Options and the Private Company 56 Private companies that plan an IPO in the future can grant options with the knowledge that when they issue stock, the market will place a value on the stock. Despite all of these complications, private companies with no intention of doing an IPO still can and do offer stock options. They have the same options available to grant as publicly traded companies: nonqualified and qualified. The tricky part is placing a value on the stock at the time of the grant and exercise. Tip It is important to understand how the company's stock is valued so you can determine the value of your options. The primary difference between valuing a private company's stock and a publicly traded stock is the timeliness of the valuation. Publicly traded stock is valued every time there is a transaction. Employees can check the worth of their options or stock quite easily by using one of the many online services such as http://www.morningstar.com, or by looking at the stock's price in the financial sec- tion of the newspaper. The private company may not provide the same information on a timely basis, since it often bases stock valuation formulas on financial accounting measures, which may take some time to calculate. Employees of private companies may not receive updates on the value of their options and stocks more than once a month. This may take some of the incentive out of options. Tax Issues Stock options granted by private companies must follow the same guidelines as publicly traded companies. Incentive stock options have the same holding period and accumulation requirements.