Preparing for an IPO 

Your company just announced it has filed to go public. Excitement can build quickly, but you may also feel overwhelmed, uncertain, and even pressured to make the “right” decisions. These are emotions we frequently hear from individuals preparing for an IPO. 

Below are key considerations to help you strategically plan for this transition.

Before the IPO: Revisit Your Financial Plan

Take a step back and reassess your overall financial picture. 

Have you fallen behind on savings? Are you on track for larger goals such as buying a home, funding college, or retiring early? 

There will be plenty of office chatter about what coworkers plan to do with more money. Tune out the noise. Your strategy should reflect your financial plan and your goals—not theirs. 

Just as important, make sure you understand what you own: 

• Are your shares RSUs, ISOs, or NSOs? 
• What are the vesting schedules? 
• Are there performance-based or event-based triggers? 

Understanding these details before the company goes public can help you prepare for tax implications and make informed decisions about exercising or selling. 

You may also consider partnering with a tax professional or financial advisor to model scenarios before liquidity becomes available.

IPO Timeline

Every company’s path is different, but most IPOs follow a similar sequence: 

1. Filing the S-1 with the SEC: The company publicly discloses its financials and business details.
2. Institutional meetings and pricing: Investment bankers work with the company to determine the IPO price.
3. Listing on the exchange: Shares begin trading. Expect volatility, especially on the first day.
4. Lock-up period: Insiders are typically restricted from selling shares for a set period of time. 

Understanding this timeline helps you to manage expectations and prepare for the IPO accordingly.

Taxes and Strategy

The type of equity you own will drive many of your planning decisions, as each comes with different tax considerations. 

It’s important to understand: 

• Do you need cash to exercise options? 
• When will the tax bill be due? 
• How will this income affect your broader tax picture? 

RSUs (Restricted Stock Units) 

• Taxed as ordinary income when they vest (shares × stock price at vest = income). 
• Double-trigger vesting (time-based + IPO event) is common. 

ISOs (Incentive Stock Options) 

• Generally more complex due to tax treatment. 
• Know your exercise price and the Fair Market Value (409A price pre-IPO). 
• Exercising may trigger Alternative Minimum Tax (AMT). 
• Understand how much AMT could be owed and when it would be due. 

NSOs (Non-Qualified Stock Options) 

• Taxed as ordinary income on the spread between the strike price and FMV at exercise. 
• May also be subject to payroll taxes.

Building a Sales Strategy

An IPO can create significant wealth—but without proper planning, it can also introduce unnecessary risk and tax surprises. 

Consider: 

• What percentage of your net worth should be tied to one company? 
• Will you sell shares on a predetermined schedule (monthly or quarterly)? 
• Will you sell RSUs immediately upon vesting to limit exposure and risk? 
• Will you use proceeds to strengthen your broader financial plan? 

A structured, rules-based approach often removes emotion from decision-making.

Let Your Goals Guide You

Revisit your personal financial plan and let your goals guide your strategy. 

• Do you want to fund your children’s education? 
• Has upgrading your home been postponed? 
• Are your retirement goals on track? 
• Are you positioned to take on additional risk? 

Your answers will help determine when and how much to sell. If your goals are already on track, you may have more flexibility. If you’re playing catch-up, diversification may be more urgent. 

Every situation is personal. Thoughtful planning can turn this milestone into long-term financial progress.