Post-IPO: Key Decisions
Last updated
Last updated
What key decisions do I need to make/consider if I work for a publicly traded company?
My company just IPO'd. What do I need to know (and do)?
How do I make smart tax decisions with my stock comp for my post-IPO company?
At every stage of a company (Pre-IPO; Liquidity Event; Post-IPO), there are at least a couple of important decisions you need to consider and make regarding your equity compensation. But post-IPO (and especially if you were with the company pre-IPO), there is an increased number of decisions you need to consider/make:
Concentration risk is frequently heightened (stock value increase)
Overall wealth is frequently much higher (more need for planning, and more planning options)
Liquidity exists to sell shares (requires a )
More tax optimization opportunities exist (for more details see )
New equity compensation plans may arise (), new strategies may present (), and new restrictions also arise (lockups; black-out periods)
When your company is publicly traded, especially if you were with the company pre-IPO, there are primarily two key decisions/focus vectors:
(1) How much stock do you want to sell; when; and with what rules? Your vested and unvested equity likely represents a large percentage of net worth concentrated in one asset. It is important to develop a systematic plan for managing your risk, which will emphasize diversification and the creation of a selling/divestment plan.
(2) How can you best optimize for tax? Post-IPO, there are more tools available for tax management. Like always, tax optimization should be a tertiary focus (behind financial plan/goals and investment risk), but smart tax management frequently increase your after-tax wealth by 3-8%, and sometimes more than 25%.
[Selling Restriction] Post-IPO lockup. After going public, most companies implement a "lockup period," which restricts management, employees, and VC-investors from selling any of their stock for a period of time post-IPO (most frequently 180 days).
[Selling Restriction] Blackout windows. To help prevent against insider trading, nearly all companies implement a blackout window each quarter (typically starting 0-15 days prior to the fiscal quarter end, and ending 2-4 days after earnings are publicly reported).
We provide detailed, step-by-step instructions on creating a selling plan on a separate page:
More than 50 tax strategies exist for stock-based compensation. We cover each in far more depth in a dedicated section of this site:
[New Opportunity] Employee stock purchase plan (ESPP). It's common for companies to launch an once they become publicly traded. In many cases, an ESPP can provides one of the most attractive risk-reward ways to invest.
[New Opportunity] 10b5-1 plan. For a variety of reasons, most publicly traded companies offer/support (at least for senior management). These plans can make the implementation of your selling plan significant easier.
[New Opportunity] derivative contracts for hedging (e.g. Call and Put Options). If you are an ex-employee, but still have a large amount of stock in your former employer, Call and Put options may be available for you to trade to help hedge/manage your risk. For more info see