Move through a transition
The planning window closes before the liquidity opens
Most of the decisions worth making about an IPO or acquisition have deadlines that pass before the money arrives.
In one paragraph
Pre-liquidity planning is the work done before an IPO, tender offer, or acquisition closes: exercise timing, holding-period decisions, charitable and gifting strategies, and a sale plan for after lock-up. Several of these options expire once the deal is announced or priced, which is why the timing matters more than the tactics.
The problem
Why waiting until the deal closes costs you
When a company files or announces, the calendar takes over. Lock-up periods restrict when you can sell. Trading windows and blackout periods narrow further if you are an insider. Some strategies that were available while the stock was illiquid are simply gone.
The people who do well in these events are rarely the ones who read the market correctly. They are the ones who decided in advance how much of the position they would sell, on what schedule, and what the proceeds were for.
There is also a quieter risk. A single event can turn a comfortable balance sheet into a concentrated one overnight, and the emotional pull to hold is strongest exactly when concentration is highest.
What we actually do
The work, item by item
- 01
Model the outcomes before the price exists
We run your position at several plausible valuations, including one that disappoints. Knowing what each scenario means for your plan removes most of the pressure from the actual number.
- 02
Decide about exercising while you still can
For option holders, exercising before an event can start holding-period clocks, but it also puts real money at risk in a company that has not yet proven a public market. That trade-off deserves a decision, not a default.
- 03
Write the sell plan before lock-up ends
A schedule agreed in advance, and where appropriate a 10b5-1 plan coordinated with your company's counsel, keeps the decision out of the weeks when the stock is moving and everyone has an opinion.
- 04
Look at charitable and gifting timing
Gifting appreciated shares or funding a donor-advised fund is a different calculation before an event than after it. If philanthropy is already part of your life, this is the moment it is worth examining.
- 05
Coordinate the tax year around the event
A liquidity event can push you into a bracket you have never seen, trigger estimated payments, and change what other planning makes sense that year. Your CPA needs to be in the room early.
- 06
Plan what the money is for
The most common regret after an event is not a tax mistake. It is having a large number in an account with no decision attached to it for two years.
An example
The lock-up that arrived faster than the plan
An operations lead at a device company holds options granted four years before the S-1. The filing lands in February, the listing in April, and the lock-up runs six months from there. On paper that is a long runway. In practice the decisions that mattered were the ones available before the filing, and by February most of them had closed.
What we work through in that window: whether exercising early is worth the cash and the alternative minimum tax it can trigger, what a 10b5-1 plan would need to look like to sell into the first open window without a judgment call in the moment, and how much of the position has to leave to cover the tax on the part that stays.
The point is not to guess where the price lands. It is to decide, while deciding is still possible, what happens at each price.
A composite illustration, not a specific client. Your situation and results will differ.
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Straight answers
IPO & acquisition planning: common questions
Before the company files, if you have any visibility into the timeline. Several of the more useful strategies depend on acting while the stock is still illiquid and the valuation is lower, and they close off once a deal is announced. If a filing has already happened, planning is still worth doing, it just has fewer options available.
A lock-up period restricts insiders and employees from selling shares for a set window after an IPO, commonly around 180 days. It matters because your first opportunity to diversify may come months after the price is set, and often at the same moment thousands of colleagues gain the same ability. Planning for that date in advance is more useful than reacting to it.
Sometimes, and it depends on the type of option, the spread, your cash position, and your tolerance for putting real money into a company with no public market yet. Early exercise can start holding-period clocks that affect tax treatment, but it also converts a paper opportunity into an actual investment that can lose value. This is a decision to model, not to guess.
Yes, and often it is faster. Acquisitions can convert your equity to cash, to acquirer stock, or to a mix, sometimes with earnout provisions attached over several years. The timeline between announcement and close is usually shorter than an IPO runway, which compresses the window for planning and makes early conversations more valuable.
Related
These usually come up alongside it
- What this involves →
Equity compensation
Vest dates arrive whether or not anyone has thought about them. The work is deciding, ahead of time, what you sell, what you hold, and what the tax bill will be.
- What this involves →
Tax strategy
Most tax advice assumes you own a business. When your income is a paycheck, the levers are fewer, and using them depends entirely on timing.
- What this involves →
Business exit planning
Two owners can sign the same purchase price and keep different amounts, sometimes by a wide margin. The difference is structure, timing, and planning that happened years earlier.
This material is for general educational purposes only and is not intended as tax, legal, or investment advice. Neither GGM Wealth Advisors nor Cambridge provides tax or legal advice. Please consult a qualified professional about your specific situation. Estimates are illustrative, based solely on the figures you enter and simplified assumptions. Your actual results will differ.
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Bring whatever is on your mind: a vest date you are unsure about, an offer you are weighing, a business you might sell in three years. Nothing to prepare, no cost, and you will leave with something useful whether or not we end up working together.