Tech IPO or Acquisition: Tax and Financial Planning

The tax consequences of equity decisions before and after liquidity event can be substantial, and expert help can make sure you’re maximizing your financial benefit and minimizing unnecessary costs.

What you need to do

Key steps to consider, what to watch out for, and ways advisory firms can help you understand how to make the most of your equity.

  • Document Inventory

    The equity grant you signed years ago, the 83b election you filed at a previous job, or timing of certain company and personal events can all significantly affect your tax bill.

  • 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.

  • 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.

  • IPO, SPAC, Acquisition, or Direct Listing?

    Based on the type of event you’re undergoing and 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

  • Inaccurate calculation of equity value
  • Under-budgeting for taxes
  • Having too much concentrated risk in your portfolio

How can advisory firms help?

  • Tax Firms

    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.

  • Financial Advisory Firms

    Cash and 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.

  • Trust & Estate Firms

    Founders and 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.

Our platform provides insights on your financial wellbeing

Contextualize Your Wealth

Enter your asset details

Realize More Value

Unrealized Value

Based on what you’ve shared, you could realize up to $105K in additional value

Find Your Firms

Your Firms

Pairing Attributes
  • Business Tax
  • Impact Investing
  • IPO Expertise