What sets unlisted companies apart from listed ones
Unlisted companies usually have less public information than listed companies and are not subject to the same reporting requirements. This can make valuation and risk assessment more dependent on your own analysis and the information you receive from the company.
Another difference is that changes of ownership are often more formal and governed by agreements. The articles of association, shareholders' agreements and any rights of first refusal can affect both how you can buy and how you can sell.
What you need to check before investing in unlisted shares
When you invest in unlisted companies, it is especially important to examine both the company and the terms, since there is less standardisation than on the stock exchange.
- How the company makes money and what drives its growth
- Which ownership terms apply, such as a post-transfer pre-emption right (hembud) or a right of first refusal (förköpsrätt)
- How the valuation was set and what it is based on
- How and when you can sell your shares in the future
- What capital the company needs and how it will be used
Once you have a handle on these parts, it becomes easier to judge whether the investment matches your risk level and your time horizon.
When unlisted investments are a good fit and when they are not
Worth bearing in mind
Unlisted companies can be a good fit if you can tie up capital for a longer period and are comfortable with the value being harder to follow on an ongoing basis. Because trading is more limited, it can also be hard to sell when you want to, which makes planning important even before you invest.
If, on the other hand, you need high liquidity or want to be able to reallocate quickly, unlisted investments may be less suitable. Listed alternatives may then be easier to manage, both in terms of transparency and the ability to sell.
Frequently asked questions
Why invest in unlisted companies?
To gain access to early growth opportunities and companies that are not yet available on the stock exchange.
Are unlisted companies riskier?
Yes. Information can be more limited and trading less liquid, which can make it harder to assess the value and to sell.
How do I sell unlisted shares?
Sales often take place through brokers, platforms or directly to other investors. The process is more manual than on the stock exchange.
How do I know what the share is worth?
The valuation is often based on previous trades, the company's results and its growth plans. There can be greater variation than for listed shares.
Do I have to sign an agreement when buying and selling?
Yes. In unlisted trades, an agreement and an update of the share register are important steps for the trade to be completed correctly.