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.
Before the bell rings on IPO day, make sure you’re crystal clear on:
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.
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.
This is where things get tricky and potentially expensive.
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.
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.
Ask yourself:
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.
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.
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.
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