Six Smart Financial Moves to Make Before Your Company’s IPO

For many employees, an IPO creates an opportunity – but also comes with complexity. Decisions made in a short window can have long-term financial consequence. Whether you’ve been with your company from the early days or joined more recently, preparing for an IPO requires foresight, organization, and the right guidance. The difference between reaction and planning can mean millions of dollars over time. 

Here are six smart financial moves to make before your company goes public. 

Step 1: Get Organized & Identify What You Actually Own 

Start with clarity.  

Download and review all stock plan documents and grant agreements. Identify:  

• Type of equity (RSUs, ISOs, NSOs, restricted stock)  

• Vesting schedules  

• Strike prices  

• Expiration dates  

• Liquidity restrictions  

• Tax treatment  

Each form of equity is taxed differently. Without understanding what you own, you can’t model outcomes accurately. Knowing exactly what you own, and when you can exercise or sell, helps you plan strategically rather than reacting under pressure later. Precision here prevents expensive surprises later. 

Step 2: Define Your Financial Goals and Build a Plan Around Them 

Before you decide to sell, define what you’re solving for, and what financial comfort looks like for you.  

Is the IPO an opportunity to:  

• Achieve financial independence?  

• Reduce career risk?  

• Fund philanthropy?  

• Diversify concentrated wealth?  

• Create generational assets?  

A financial plan should translate your goals into measurable targets and is the framework that connects your vision to your strategy. It helps you decide what to sell, when, and why. Since the stock price is still unknown before the IPO, your plan should model multiple scenarios using different potential share prices, tax outcomes, and vesting timelines. This shows how each variable could affect your wealth and cash flow, helping you determine when and how much to sell (or retain) to meet your goals. This also puts real financial metrics around what can be an emotional experience. 

The goal isn’t to predict the stock price. It’s to know in advance how you’ll respond if it’s $30, $80, or $150.  

Planning replaces emotion with quantified decision-making.  

Step 3: Prepare Now for What You’ll Do After the Lock-Up Period  

Most employees participating in an IPO are subject to a lock-up period, typically 90 to 180 days after the company goes public, during which shares cannot be sold. 

What you do after the IPO lock-up period expires can materially impact your long-term wealth. The key is deciding in advance. 

Before the lock-up ends, revisit the financial plan. That plan should already model multiple stock price scenarios and outline what actions make sense in each case. 

With scenario modeling already complete, you can act intentionally. That might mean: 

• Selling a predetermined percentage to diversify concentrated equity compensation 

• Exercising options in a tax-efficient manner 

• Holding shares to participate in potential long-term upside 

• Staggering sales to manage capital gains exposure 

The objective isn’t to time the market. It’s to execute a strategy aligned with your long-term financial goals. 

Step 4: Minimize Your Tax Burden 

Equity events often create large, lumpy tax exposure. 

Key considerations include:  

• Ordinary income vs. capital gains treatment  

• AMT exposure for ISOs  

• Net Investment Income Tax (NIIT)  

• State tax implication  

• Timing of exercise vs. sale  

Strategic levers may include:  

• Exercising ISOs before IPO (if permitted an appropriate)  

• Staggering sales across tax years  

• Holding for long-term capital gains treatment  

• Donating appreciated low-basis shares to a Donor Advised Fund (DAF) 

• Coordinating with other income events  

The objective isn’t to minimize taxes in one year – it’s optimizing after-tax wealth over time.  

IPO tax planning is not a filing exercise. It’s a multi-year strategy.  

Step 5: Review Your Estate Plan 

A sudden increase in wealth means your estate plan should evolve as well.  

Many employees overlook that certain states have estate tax levels far below the federal level, such as Washington and Oregon. In California, probate fees can be substantial, and without planning heirs may face avoidable probate costs.  

Before liquidity, consider:  

• Updating wills and trusts  

• Reviewing beneficiary designations  

• Exploring gifting strategies  

• Evaluating trust structures for future appreciation  

• Integrating philanthropic planning  

Proactive planning allows appreciation to occur outside your taxable estate, a powerful strategy when equity value may rise post-IPO.  

Estate planning is most effective before liquidity, not after.  

Step 6: Get Your Team in Place 

An IPO touches multiple disciplines simultaneously: 

• Financial planning  

• Equity compensation modeling  

• Tax strategy  

• Investment management  

• Estate planning   

You want to have the right support network. Assemble a team of professionals, including a financial advisor, CPA, and estate attorney, who can coordinate across disciplines.  

A coordinated advisory team ensures decision are integrated rather than fragmented.  

Without coordination, you risk:  

• Exercising options without modeling AMT  

• Selling shares without portfolio integration  

• Triggering unintended tax consequences  

• Allowing concentration risk to linger 

IPO planning is complex. It should not be handled in silos. 

Final Thoughts 

An IPO can be the culmination of years of hard work, but it’s also a financial inflection point.  

The most successful outcomes rarely come from perfect market timing. They come from disciplined planning, tax awareness, and risk management executed before the spotlight is on.  

Clarity before liquidity is what preserves wealth after it arrives.  

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Important Disclosures:

This article is not intended to provide and you should not rely upon it for accounting, legal, tax or investment advice or recommendations. We are not making any specific recommendations regarding any financial planning, investment or tax strategy, and you should not make any financial planning, investment or tax decisions based on the information in this article. This article is intended to be educational in nature and to discuss a few limited aspects of very complex legislation or other complex subject matters. This article is not a comprehensive or complete summary of considerations regarding its subject matter. Where we obtain information from third-party sources, we believe such sources to be reliable but we do not guarantee their accuracy. We recognize that individual circumstances vary and the opinions expressed in this article may not be appropriate for everyone. Please consult with a Freestone client advisor, accountant, or lawyer regarding options tailored for you. Please note that Freestone does not approve or endorse any third-party content hyperlinked to in this article, if applicable.