Assess Your Current Equity

Identify all types of equity: stock options, shares, grants and their statuses Determine vesting schedules and exercise eligibility for each equity type Review latest 409A and preferred valuations to understand convergence patterns Note percentage eligible for long-term capital gains versus ordinary income treatment

RSUs trigger taxes at liquidity event through double-trigger taxation schedule First trigger is vesting, second trigger is material liquidity event All vested RSU income taxed as ordinary income at trigger date Companies often allow selling portion of RSUs to cover tax obligations

Financial Goal Planning

Evaluate how additional cash would impact your ability to achieve goals Consider qualitative and quantitative aspects of having extra liquidity available Assess urgency of liquidity needs to determine selling versus holding priorities Reflect on values and spending priorities before gaining actual liquidity access

Build Scenario Analysis

Create cash flow projections for selling all shares immediately option Model holding all shares and exercising maximum options scenario Analyze combination strategies balancing immediate liquidity with potential upside Factor in life changes like marriage, children, job changes, location moves

Tax Optimization Strategies

Consider donor advised funds and charitable remainder trusts for savings Work with professionals to apply tax strategies to your situation Plan around potential changes in tax status or income levels Evaluate timing of decisions based on tax implications and regulations

Understand your specific liquidity event type and associated lockup restrictions Calculate RSU tax obligations and prepare for immediate payment requirements Build comprehensive cash flow scenarios comparing selling versus holding strategies Document your decision rationale in writing to minimize long-term regret

IPO Guide for Startup Employees

Curated by: Rubric Advisors

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Understanding IPO Basics

Going public means listing on exchanges like NYSE or NASDAQ through IPO process
IPO is labor-intensive effort taking several months with multiple stakeholders coordination
Two main types: Direct Public Offering (DPO) and Initial Public Offering (IPO)
IPOs typically include lockup periods preventing share sales for 90-180 days

Options Overlay Direct Indexing

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Growth Visualizer Risk Assessment

Understanding IPO Basics

Assess Your Current Equity

RSU Tax Implications

Financial Goal Planning

Build Scenario Analysis

Tax Optimization Strategies

Key Takeaways

Related Topics

Tender Offers

A Framework for Exercising Stock Options

How to Communicate Equity Value to Employees

Understanding IPO Basics

Assess Your Current Equity

RSU Tax Implications

Financial Goal Planning

Build Scenario Analysis

Tax Optimization Strategies

Key Takeaways

Related Topics

Tender Offers

A Framework for Exercising Stock Options

How to Communicate Equity Value to Employees