Navigating IPOs and acquisitions
Navigating IPOs, acquisitions, and secondary markets can be difficult on your own. An experienced partner will help with IPO tax and financial planning with tax projections and multi-year exercise/sell strategies.
Navigating IPOs, acquisitions, and secondary markets can be difficult on your own. An experienced partner will help with IPO tax and financial planning with tax projections and multi-year exercise/sell strategies.
What you need to know
Key steps to consider, common mistakes, and services that can help make it all easier:
1. Document Inventory
The equity grant you signed years ago, the 83(b) Election you filed at a previous job, or timing of certain company and personal events can all significantly affect your tax bill.
2. Calculate tax credits
Equity events can have an impact not only on your current year’s taxes but in future years as you receive rollover credit or spread the realized gains out over several tax years.
3. Decide to Exercise, Sell or Forfeit
Depending on whether your shares have vested, the types of options or grants, and your tax bracket, there may be a few trigger points at which it makes more sense to exercise vs. sell vs. forfeit a certain number of shares.
4. IPO, SPAC, Acquisition, or Direct Listing?
Based on whether you are navigating an IPO, DPO, or acquisition, the specific terms around employee and founder liquidity, there are different restrictions and considerations for the lock-up period, the stability of the share price, and more.
Common Mistakes
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Equity fair market valueInaccurate calculation of equity value
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budgeting for taxes
Under-budgeting for quarterly or annual taxes
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concentrated risk
Having too much concentrated investment risk in your portfolio
What services should I consider?
Navigating IPOs and acquisitions on your own can be difficult. Finding an experienced advisor can help you make the best plan based on your your personal goals and milestones and simplify the fun stuff, like spreadsheets and legal jargon.
Equity 1:1 Tax Planning
Tax projections
Evaluate the various tax scenarios between any exercise or payout options presented as part of the deal (equity exchange vs. cash) and at what timing (now vs. later).
Strategic timing
Manage your tax filings and deductions strategically over multiple years in order to maximize the value of your shares and minimize the potential tax consequences.
Next: Wealth Management
Cash & risk tradeoff assessment
Manage cashflow needs for exercising options if needed, and analyze the various risk scenarios for shares based on the amount and timing of when you sell.
Investment strategy
Decide how to invest a lump sum of cash received from a sale and plan to gradually diversify away from a concentrated stock holding to reduce your investment risk.
Looking ahead: Estate Planning
Founders & Investors
Consult an attorney if your equity makes up a large percentage of ownership in the company and/or if you anticipate there may be significant long-term appreciation.
Transferring to a trust
Transfer your company stock to a trust while the market value is lower and you could significantly reduce any gift transfer taxes and/or reduce your tax liability now and later if donated to a charitable trust.
Don’t wait for a mistake to get better advice
Tax, financial, and estate advisors tailored to you.
