Your company filed for IPO. Here is what happens to your equity next.
The IPO announcement is not the end of your equity journey. It is the beginning of a compressed decision window in which the choices you make will define your financial trajectory for the next decade.
The lockup period: what it is and why it constrains you
Most IPOs come with a 180-day lockup period during which insiders and employees cannot sell shares. This exists to prevent a flood of employee selling that would destabilize the post-IPO price.
The lockup expiration is one of the most significant financial events of your career. Depending on stock price movement and your concentration, you may be looking at a decision involving millions of dollars compressed into a short window after lockup opens.
Taxes at an IPO: what surprises most employees
Incentive stock options exercised before IPO may trigger the Alternative Minimum Tax, even if you have not yet sold the shares. Many employees who exercised ISOs early were caught off-guard by AMT bills they could not cover without selling the stock that created the liability.
RSUs that were double-trigger, meaning they required both a time vest and a liquidity event, will often all vest simultaneously at IPO. A large batch of RSUs vesting at once creates a concentrated ordinary income event in a single tax year.
Your 10b5-1 plan: how to sell without creating legal exposure
As an insider, you cannot sell stock whenever you want. Trading windows exist and they are strictly enforced. A 10b5-1 plan lets you set up a predetermined schedule for selling shares, adopted when you are not in possession of material non-public information.
The earlier you set up a 10b5-1 plan relative to the lockup expiration, the more flexibility you have. Plans adopted within 90 days of a trading window may be viewed more skeptically by regulators. A financial advisor with IPO experience can help you structure a plan that meets SEC requirements and aligns with your financial goals.
Charitable strategies that work best in the IPO window
Donating appreciated stock to a donor-advised fund is one of the most tax-efficient moves available to IPO beneficiaries. You receive a charitable deduction for the full fair market value of the shares, and you avoid recognizing capital gains on the appreciation.
Qualified Opportunity Zone investments are another tool worth understanding in the IPO context. Realized capital gains reinvested into a Qualified Opportunity Zone Fund can defer and potentially reduce the tax liability, depending on the holding period.
HenryFi Match
HenryFi matches professionals going through equity events with advisors who specialize in exactly this situation. The introduction is exclusive. One advisor. No shared leads.
Find my advisorReady for a Match
You have read the playbook. Now get someone who has run it.
The advisors in HenryFi's network have worked with professionals at pre-IPO and post-IPO companies. If your moment is approaching, the right time to have this conversation is now.
Match me with a specialistMatches are exclusive and free for professionals. Advisors pay a success fee, not you.
← Browse all guides