The months leading up to an IPO can feel like a countdown to payday. You’ve been working at a private company for years, collecting RSUs or options, and now there’s a real timeline for liquidity. But IPOs aren’t just about dollar signs; they come with lockups, taxes, restrictions, and timing challenges that can dramatically affect your outcome. Whether you’re a startup veteran or a first-time equity holder, here’s how to approach the IPO window with clarity and confidence.
Step 1: Know What You Own
Before the bell rings on IPO day, make sure you’re crystal clear on:
- How many vested vs. unvested shares you have
- What type of equity you hold (RSUs? ISOs? NSOs?)
- Your strike price and 409A valuation if you’ve been granted options
- Whether any of your shares were exercised early
- The vesting schedule going forward, including any applicable acceleration clauses
This may sound basic, but many professionals come into the IPO window without a clear understanding of their equity. That lack of clarity can lead to missed opportunities or painful tax surprises.
Step 2: Understand the Lockup Rules
In most IPOs, employees are subject to a lockup period, typically 180 days, during which they cannot sell their shares. Even though your equity may technically vest or become liquid on paper, you’re still restricted from realizing cash. It’s also common to see staggered unlocks (e.g., 25% of shares become eligible to sell after 6 months, then more become eligible over time). If your company allows early window liquidity through structured sales or tender offers, that should be analyzed as part of your plan.
Step 3: Model the Tax Exposure
This is where things get tricky and potentially expensive.
For RSUs:
When your company goes public, your RSUs may automatically vest. This means the full value on the day of vesting becomes ordinary income, and you’ll owe taxes even if you’re locked up and can’t sell.
For Options ISOs or NSOs:
The decision to exercise, especially pre-IPO, can lead to alternative minimum tax (AMT) exposure. If you exercised early and filed an 83(b) election, you may already be on the clock for long-term capital gains. If you didn’t, the spread between strike and fair market value at exercise could trigger a large AMT liability.
These examples show the value of coordination. Many employees are hit with unexpected tax bills they can’t pay due to their stock being locked up or having lost value.
Step 4: Set Goals for Liquidity Before the Window Opens
Ask yourself:
- What do I want to do with the cash?
- How much liquidity do I need in the next 1–3 years?
- What level of risk am I comfortable with?
The goal isn’t to sell everything the moment you’re able, but you should have a clear strategy for how much to hold, sell, and diversify, based on your bigger financial picture. This is especially important if your equity value represents more than 10–20% of your net worth.
Step 5: Think in Systems, Not Moments
The IPO itself is a milestone, but what happens next matters more. New grants may continue, stock prices may swing, and the media cycle may drive emotional decisions. We encourage clients to set up systematic sales plans, like 10b5-1 strategies, which allow you to offload shares on a schedule, even during blackout periods. These plans help you stay disciplined and avoid decision fatigue in a high-volatility environment.
Liquidity ≠ Simplicity
Going public doesn’t automatically make your equity simpler. In many ways, it becomes more complex, especially when public stock introduces visibility, volatility, and opportunity all at once. You don’t need to navigate it alone. A coordinated plan can help you reduce regret, lower taxes, and turn this career milestone into a real financial win.
Wealthspire Advisors is the common brand and trade name used by Wealthspire Advisors LLC and its subsidiaries, separate registered investment advisers and subsidiary companies of NFP Corp., an Aon company. © 2025 Wealthspire Advisors
This material should not be construed as a recommendation, offer to sell, or solicitation of an offer to buy a particular security or investment strategy. The information provided is for informational purposes only and should not be relied upon for accounting, legal, or tax advice. While the information is deemed reliable, Wealthspire Advisors cannot guarantee its accuracy, completeness, or suitability for any purpose, and makes no warranties with regard to the results to be obtained from its use.
Wealthspire Advisors and its representatives do not provide legal or tax advice, and Wealthspire Advisors does not act as law, accounting, or tax firm. Services provided by Wealthspire Advisors are not intended to replace any tax, legal or accounting advice from a tax/legal/accounting professional. The services of an appropriate professional should be sought regarding your individual situation. You should not act or refrain from acting based on this content alone without first seeking advice from your tax and/or legal advisors.
Certain employees of Wealthspire Advisors may be certified public accountants or licensed to practice law. However, these employees do not provide tax, legal, or accounting services to any of clients of Wealthspire Advisors, and clients should be mindful that no attorney/client relationship is established with any of Wealthspire Advisors’ employees who are also licensed attorneys.
Please Note: Limitations. The achievement of any professional designation, certification, degree, or license, recognition by publications, media, or other organizations, membership in any professional organization, or any amount of prior experience or success, should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results or satisfaction if Wealthspire is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of Wealthspire Advisors by any of its clients or a third party.
Registration of an investment advisor does not imply that Wealthspire Advisors or any of its principals or employees possess a particular level of skill or training in the investment advisory business or any other business.
Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, Certified Financial Planner®, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
