I'm not suggesting that the valuation is truly worth $1.2M but if they did a 409A valuation or had their board decide on the FMV to determine strike price, the value would be at least 15% of the post-money valuation. My point is simply that if they've issued a reasonable number of options (over 0.25% of the total authorized shares), there is no way that their employees would only pay a few hundred dollars to exercise.
In an extended exercise period model, there's still the issue of Alternative Minimum Tax on exercise or long-term vs. short term capital gains. There will also likely be lockups on those shares whether inherently built in or in an eventual IPO.
In an extended exercise period model, there's still the issue of Alternative Minimum Tax on exercise or long-term vs. short term capital gains. There will also likely be lockups on those shares whether inherently built in or in an eventual IPO.