Leading AI companies in particular — Anthropic, OpenAI — have achieved valuations in the hundreds of billions of dollars while remaining private, creating demand from investors who want exposure to companies that may be a decade or more away from a public listing, if they ever list at all. The result is a large and active secondary market, with prices that often reflect significant premiums over the last primary round valuation.
In my experience, the current secondary market frenzy in AI company equity is unlike anything I've seen in my career, and I've been practicing through several technology cycles. The companies driving the most interest — Anthropic, OpenAI, SpaceX, Stripe, and a handful of others — are commanding valuations in the hundreds of billions of dollars without any near-term IPO plans. For investors who want exposure to these companies, secondary markets are the only available path. Secondary demand is coming from multiple directions: family offices that traditionally invest in public equities wanting AI exposure; institutional investors with mandates that don't allow them to invest in primary rounds but that permit secondary purchases; sophisticated individual investors who have participated in early-stage rounds and want to follow on; and speculative buyers who believe the valuations will continue to rise. The pricing reflects this demand — secondary prices for shares in leading AI companies have, in some periods, significantly exceeded the per-share implied valuation of the last primary financing round. This premium reflects perceived scarcity and growth expectations, but it also means buyers are paying top dollar for an asset whose legal status may be more complicated than they realize.
Almost all private company equity — including common stock, preferred stock, and shares derived from option exercises — is subject to transfer restrictions in the company's shareholder agreements. These restrictions typically require company consent before any transfer, give the company and investors a right of first refusal, and may prohibit transfers to specified categories of buyers entirely. Most buyers on secondary platforms never see these documents before agreeing to buy.
The transfer restrictions in private company shareholder agreements are not optional provisions and they are not negotiable after the fact. They are enforceable contractual provisions that bind the selling shareholder, and by extension they constrain what rights the buyer can receive. The most common restrictions are: first, company consent requirements — the company must approve the transfer in writing before it becomes effective; second, rights of first refusal — the company and its major investors have the right to purchase the shares at the same price before any sale to a third party can proceed; third, prohibited transferee provisions — many agreements prohibit transfers to competitors, to certain foreign nationals or entities that would raise regulatory concerns, and in some cases to parties whose ownership would push the company's shareholder count above the 2,000-shareholder SEC reporting threshold; and fourth, lock-up provisions — some equity, particularly equity from recent option exercises or recent rounds, is subject to transfer lock-up periods that haven't yet expired. The information problem for buyers is acute: these provisions are contained in private shareholder agreements that the buyer typically does not have access to before agreeing to purchase. Secondary platforms provide varying levels of disclosure about these restrictions, and the disclosure is often general rather than document-specific. A buyer who closes a purchase without confirming that all of these restrictions have been properly addressed may discover that the company will not recognize the transfer.
Under Delaware law — which governs most significant private companies — a transfer of shares that violates the company's transfer restrictions is void. A void transfer means the purported buyer received nothing: the seller retains legal ownership of the shares, the company's cap table is not updated, and the buyer has no equity in the company. The buyer's recourse is limited to contract claims against the seller.
The word "void" in this context is not legal hyperbole — it has a precise meaning that prospective secondary buyers need to understand. Delaware law, under which the overwhelming majority of venture-backed and high-value private companies are incorporated, provides that a transfer of restricted shares that does not comply with the restrictions stated in the company's certificate of incorporation, bylaws, or applicable shareholder agreements is void and of no effect. This means the transfer does not occur in a legal sense: the buyer does not become a shareholder, the company's records do not change, and the company owes the purported buyer no obligations of any kind — no voting rights, no economic rights, no information rights. The buyer's recourse is against the seller, not the company. That recourse is typically a claim for breach of the purchase agreement — the seller represented that they had the right to transfer, and if they didn't, they breached — but it is a contract claim against an individual, not a claim against the company, and it may be difficult to collect. The buyer's practical situation in a void transfer scenario: they have paid a large sum of money, they have no equity in the company, and they have a lawsuit against the person who sold to them. Given that secondary transactions in leading AI companies can be for millions of dollars, the stakes of getting this wrong are significant.
Anthropic, like other leading private AI companies, actively manages its shareholder base through transfer restrictions and ROFR enforcement. It is publicly known that Anthropic monitors and controls secondary transactions in its shares and that the company takes the position that transfers not properly consented to and processed through the company's transfer mechanics may not result in valid equity ownership. Prospective buyers of Anthropic shares on secondary platforms should proceed on the assumption that company consent and ROFR clearance are required for any transaction to be recognized as valid.
Anthropic, as one of the world's most valuable private companies with a mission-driven approach to AI development, has strong reasons to maintain careful control over its shareholder base. It is publicly known and broadly understood in the secondary market community that Anthropic, like OpenAI and other leading private AI companies, actively enforces its transfer restrictions and right of first refusal provisions, and that the company takes a careful approach to who it allows to become a shareholder. This is not unusual at this stage and valuation — maintaining control over the shareholder base is standard practice for high-value private companies that are not ready for or interested in a public listing. The practical implication for prospective secondary buyers is that a purchase of Anthropic shares on a secondary platform without proper company consent and ROFR clearance carries material risk that the transfer will not be recognized as valid by the company. The company is not obligated to recognize a transfer that violates its governing documents, and if it declines to do so, the buyer has no equity interest — despite having paid for one. This is not a theoretical risk. I advise clients who are considering secondary purchases in high-value private companies — Anthropic, OpenAI, SpaceX — to treat company consent and ROFR clearance as prerequisites, not afterthoughts. If a secondary platform or a broker cannot provide documentation confirming company consent to the specific transaction you are being offered, that is a serious due diligence flag that should stop the transaction until it is resolved.
Before buying secondary shares, a buyer should: obtain and review the shareholder agreement and any ROFR/Co-Sale Agreement; confirm that the company has consented to the transaction or that a clear consent process is underway; confirm that ROFR rights have been offered and waived; request documentation of the seller's ownership and chain of title; and understand what information rights (if any) the shares come with.
In my experience, the due diligence that most secondary buyers do before purchasing private company shares is inadequate relative to the risks. The minimum due diligence for any significant secondary purchase should include: First, review of the governing documents. The buyer should request and review the company's shareholder agreement (or the most recent ROFR/Co-Sale Agreement), the company's certificate of incorporation, and any applicable equity plan documents. These documents contain the transfer restrictions, ROFR provisions, and consent requirements that govern the transaction. If the seller or the platform cannot produce these documents, that is itself a due diligence concern. Second, confirmation of company consent. The buyer should confirm that the company has either already consented to the proposed transaction or that a defined consent process is underway. The most reliable form of this confirmation is a consent letter or transfer approval letter from the company. Third, ROFR waiver documentation. If the company's ROFR has been properly triggered and waived, the buyer should have documentation of the ROFR notice and the waiver. Without this documentation, the buyer cannot confirm that the ROFR process was properly completed. Fourth, chain of title. The buyer should confirm the seller's ownership — ideally through a cap table entry or legal opinion — and that no prior transfers in the chain were unauthorized. Fifth, information rights. Secondary buyers of common stock often receive no information rights — they are not party to the investor rights agreement that governs information rights for preferred shareholders. Buyers should understand what they will and won't receive in terms of financial reporting after the purchase.
The purchase agreement for a secondary transaction should include seller representations about ownership and authority to sell, confirmation that transfer restrictions have been complied with, a representation that the ROFR process has been completed, indemnification from the seller for breach of any representation, and conditions to closing that require company consent documentation.
The purchase agreement is the buyer's primary contractual protection, and in my experience buyers in secondary transactions often accept purchase agreements drafted by the seller's side without sufficient attention to the buyer's interests. The key provisions for buyers include: First, representations about ownership and clear title. The seller should represent that they own the shares free and clear of encumbrances, that no lien, pledge, or security interest affects the shares, and that the seller has full authority to transfer. Second, transfer restriction compliance representations. The seller should represent that the transfer of the shares to the buyer complies with all applicable transfer restrictions in the company's governing documents. Third, ROFR completion representation. The seller should represent that the right of first refusal process has been properly completed — notice was delivered, the exercise window expired, and all ROFR holders waived — and should attach documentation of that process. Fourth, company consent as a closing condition. The buyer should make company consent — in the form of a written consent letter from the company — a condition to the buyer's obligation to close. If company consent is not received before closing, the buyer should not be obligated to proceed. Fifth, indemnification. The seller should indemnify the buyer for losses arising from breach of any representation, including the cost of any legal action required to establish ownership. Sixth, representations about the shares. The seller should represent that the shares were originally issued to the seller at the stated issuance date, that the shares are validly issued and fully paid, and that the shares are not subject to any vesting schedule, repurchase right, or other restriction that would affect the buyer's ownership.
Secondary purchases work cleanly when the company has sponsored or facilitated the transaction (company-sponsored tender offers are the gold standard), when the company has provided explicit written consent to the specific transaction, when ROFR documentation is complete, and when the seller's ownership chain is clear and documented. Buyer-initiated secondary purchases of hot private company shares without company involvement carry material risk.
Not all secondary transactions carry the same risk profile, and it is worth being clear about the scenarios where secondary purchases work cleanly. Company-sponsored tender offers are the safest structure: the company organizes a liquidity program for its shareholders, sets the price, manages the ROFR and consent mechanics, and issues updated cap table entries to participating buyers. All of the authorization mechanics are handled by the company directly. These programs have become increasingly common for high-value private companies as a way to provide founder and employee liquidity in a controlled manner. Directed secondary transactions with explicit company consent are the next safest structure: the seller and buyer agree on terms, deliver the ROFR notice, receive company consent in writing, and process the transfer through the company's transfer agent or cap table management system. The company is actively involved at every step. Secondary platform transactions where the platform has pre-negotiated a framework agreement with the company — in which the company has agreed to consent to specific categories of transactions on the platform — can also be structured safely, though buyers should confirm the specific transaction is covered by the framework. The high-risk scenario is the one that attracts the most scrutiny: a buyer on a secondary platform purchasing shares with no company involvement, no ROFR documentation, no company consent, and no verification of the seller's ownership chain. For shares in hot private companies that actively enforce their transfer restrictions — Anthropic, OpenAI, and their peers — this scenario carries a genuine risk that the buyer ends up with nothing.
In my experience, the excitement around AI company valuations has led a lot of buyers to significantly underweight the legal complexity of secondary transactions. The companies that are the most attractive to buy — Anthropic, OpenAI, and similar — are also the companies that are most careful about controlling who owns their equity. That isn't a coincidence. If you are considering a secondary purchase in one of these companies, treat it like a real estate transaction: confirm the title before you close, or don't close.
Gurpreet S. Bal is a Partner at Foley and Lardner LLP in Silicon Valley, where he advises startups, founders, and investors on SAFE financings, venture capital rounds, mergers and acquisitions, acquihires, and IPOs. He has represented clients in hundreds of transactions with aggregate deal value exceeding $60 billion across AI, semiconductors, fintech, and emerging technology. Prior to his career as a corporate lawyer and transaction advisor, he served with the U.S. Department of Justice and as an international and cross-border tax advisor at a Big 4 accounting firm.