Qualified Purchaser
An investor with $5M+ in investments, meeting a higher threshold than accredited investor.
Definition
A qualified purchaser is an individual or entity with at least $5M in investments (not including primary residence). This is a higher bar than an accredited investor ($1M net worth or $200K income). Some private funds and secondary transactions require buyers to be qualified purchasers to comply with certain SEC exemptions. This limits the pool of eligible buyers for private company shares.
Why it matters
If your company requires secondary buyers to be qualified purchasers (not just accredited investors), the pool of potential buyers is much smaller, which can make it harder to sell your shares and may result in a lower price.
Example
You want to sell shares, but the shareholder agreement requires buyers to be qualified purchasers ($5M+ in investments). This eliminates many individual buyers, leaving primarily institutional buyers and ultra-high-net-worth individuals.