When you’re working for a startup and receiving equity compensation, hopes can run high at IPO time. Often, pre-IPO employees enjoy sizable boosts in their wealth after their companies go public. When things don’t go as planned, it can be hard to let go of the hope ...
Incentive and non-qualified stock options (ISOs and NSOs) are two types of equity compensation that companies use to attract, incentivize, and retain top talent. Incentive stock options receive preferential tax treatment but come with limitations that don’t apply to ...
When you have options or restricted shares in a private company, your equity compensation is in an uncertain state. You might anxiously await news of an anticipated IPO or SPAC acquisition and strategize how to pay the tax bill on your shares when it comes due, since ...
Outstanding Returns for Pre-IPO Investors The Zoom IPO is an example of a pre-IPO shareholder’s dream. After first announcing an opening share price in the range of $28–$32, the company announced a revised initial offering price of $36 the day before public trading ...
If your company is about to undergo a liquidity event, congratulations! While many companies achieve this milestone by going through the IPO process, an IPO isn’t the only way to get there. Your company may reach public equities markets through a SPAC acquisition or ...
If you receive equity compensation in your pre-IPO company, you have several important decisions to make before IPO day. In this article, we’ll walk you through various stages of the IPO process and what you need to know at each step to get the most out of your options ...
Stock in your rising company can present a once-in-a-lifetime opportunity to build wealth. To make the most of it, however, it’s important to understand the nuances involved in buying, selling, and tax planning. Once you’re holding vested shares, you face important ...
What is Alternative Minimum Tax? The alternative minimum tax (AMT) is a provision of the tax code designed to obligate high-income taxpayers to pay at least a minimum amount of tax. When the AMT is triggered, a taxpayer must calculate their taxable income twice: once ...
Volatile economic conditions are having a big impact on startups. Inflation and market declines have spurred many companies to cut costs in a variety of ways. In addition to hiring freezes, layoffs, and consolidations, some companies are delaying their IPO dates in the ...
If your company is planning to go public, you have a lot of preparation to do. You’ll need to decide whether and how much to invest in your company before its public offering and understand the potential tax consequences of the decisions you make. The two ways ...
Because it can take anywhere from six months to two years for a company to complete the pre-IPO process, your company’s big day may seem a long way off. Once you’re aware of the plan to go public, however, you have no time to waste. Here are some key considerations to ...
If you’re a startup founder, executive, or employee, your company’s IPO might be your first experience with managing wealth. While an influx of cash is certainly a blessing, it also brings new challenges into your life. What you do the year leading up to IPO day can ...
For employees who own equity in their companies, the approach of IPO day is filled with excitement. Along with the possibility of newfound wealth, however, comes the prospect of a sizeable tax bill. If your company is on the path to public offering, you may be ...
In the first three parts of this series, we used an avocado analogy to discuss when it’s time to exercise your stock options (pick the avocados), what it takes to be ready to sell your shares (make guacamole), and how to keep more of that guacamole for yourself and ...
It’s common for startup executives to plan to sell shares to cover major expenses such as taxes that are due for the previous year’s options exercise, a child’s college tuition, or buy a new home. While this can be a useful strategy, it’s essential to plan your share ...
Amazing guacamole comes from knowhow. As any amateur dip maker can tell you, the key to great guacamole is great avocados. Picking the right avocados from the market is an art as much as a science. When it comes to your stock options understanding when your options ...
If your company is preparing to go public, whether through IPO, SPAC, or direct listing, you have a lot of decisions to make leading up to the big day. The choices you make in the coming weeks and months will have a lasting impact on your long-term financial future. ...
If you’re working at a pre-IPO company, tremendous financial opportunities may be on your horizon. You may have big dreams about what you can do with your anticipated windfall, but without clear financial goals and proper structures in place to reach them, those dreams ...
The time leading up to your company’s IPO or SPAC merger can be intensely exciting and, at times, overwhelming. A debut on the public market often marks a steep increase in income for employees. This new influx of wealth, however, requires a new level of tax planning. ...
Now that your company has filed its S-1 with the SEC, you have many decisions to make that can be tremendously consequential to your financial future. This can be overwhelming, especially considering that this is likely to be a very busy time within your company as the ...
Why do companies undertake an IPO? An IPO can be a powerful way for a company to fuel growth. By offering shares to public investors, a company gains the ability to raise large amounts of interest-free capital. Completing the IPO process also bolsters the company’s ...
If your employer offers an employee stock purchase plan (ESPP), it’s important to understand how it works and how owning stock in your company can best support your long-term financial goals. Before you decide whether to participate and, if so, how much to invest in ...
Special purpose acquisition companies, commonly known as SPACs, have been around for decades but began to soar in popularity in 2020. 2021 is seeing even more activity by SPACs, which raised more money in the first three months of this year than in all of 2020. In ...
What is an 83(b) election? When you file an 83(b) election, you’re taking advantage of section 83(b) of the Internal Revenue Code (IRC). This provision allows early investors in a company, including employees receiving equity compensation, to calculate and pay tax on ...
Stock options are a form of compensation that many startups and other companies offer their employees and other key players in the company. A stock option is a contract in which the company issuing the stock grants the right to purchase a certain number of shares at a ...
What is an 83(b) election? An 83(b) election is a way to potentially limit your tax liability for gains on shares of company stock. It allows you to pay taxes on shares before they vest, when their value may be still relatively low. You may choose to file an 83(b) ...
Restricted stock awards (RSAs) and restricted stock units (RSUs) are two types of incentive programs that are common in startup companies. While similar, there are some key differences in how these benefits are delivered and taxed. Both require careful tax and ...
Your company is going public. Whether that happens via a SPAC or the traditional IPO process, you have several important decisions to make in the near future. There are some key differences between the two processes, however, that can affect how you manage your stock ...
If you have pre-IPO shares of your company’s stock, you may be wondering when you’ll be able to cash in. Here are the basics you should know about the IPO lockup period and the importance of planning ahead for share sales. What is an IPO lockup period? A lockup period ...
The sudden onset of a global pandemic has shaken up economies around the world. When COVID-19 tightened its grip in February and March, markets plunged deeply, dashing—or at least delaying—the hopes of many investors who had anticipated public offerings this year. What ...
In the nascent days of a startup, stock options are the norm. Early employees can expect access to incentive stock options (ISOs), and non-qualified stock options (NSOs), which are leveraged type options that can make someone very wealthy, very quickly. But as a ...
In Part I of “The Importance of 83(b),” we conducted a survey of the 83(b) election and discussed in what context the election made sense when it came to restricted stock awards (RSAs). In Part II, we looked at examples of 83(b) elections for RSAs. Now, in Part III, ...
In Part I of our discussion about liquidity for startup employees, we looked at liquidity options that a company may provide for employees with illiquid stock—specifically tender offers and stock buybacks. In Part II, we’ll discuss one option that the employee can take ...
In Part I of “The Importance of 83(b),” we shared a survey of the 83(b) election, and discussed in what context the election made sense when it came to restricted stock awards (RSAs). In this post, we are going to go through some examples of what can be accomplished ...
If you work for a late stage startup, you are most likely suffering from both mental and physical fatigue. You’ve worked for many years with the expectation of a big payout from your stock options, but the company doesn’t seem in any rush to go public. “Unicorns” ...