Many employees at high-growth private companies accumulate a significant portion of their net worth through company stock, options, or RSUs.
While this can create substantial wealth, it also introduces unique planning considerations around liquidity, taxes, and concentration risk.
We help employees navigate financial decisions before and during liquidity events, including:
- Tender offers
- Secondary sales
- IPOs
- Acquisitions
Common questions include:
- Should I sell in a tender offer or hold?
- What are the tax implications when my shares become liquid?
- How do I reduce concentration risk without sacrificing upside?
- How much of my equity should I diversify?
Who This Is For
This planning framework is relevant for employees and former employees of:
- Late-stage private technology companies
- Venture-backed startups approaching liquidity
- High-growth companies with equity compensation programs
- Organizations where a meaningful portion of compensation is in stock-based equity
This includes employees at companies such as SpaceX and other similarly structured private organizations across technology, aerospace, artificial intelligence, fintech, and enterprise software sectors.
Why Private Company Stock Requires Planning
Employees with concentrated private company equity typically face three core challenges:
Concentration Risk
A large portion of net worth may be tied to a single private company, increasing exposure to company-specific risk.
Liquidity Uncertainty
Shares are often illiquid until a tender offer, IPO, or acquisition occurs.
Tax Complexity
Liquidity events may trigger significant tax liabilities depending on equity type, timing, and jurisdiction.
Common Questions We Help Answer
Should I sell my stock in a tender offer?
This depends on:
- Personal liquidity needs
- Tax implications of selling now vs later
- Expectations for future company value
- Overall portfolio concentration
What should I do before my company goes public?
Pre-IPO planning often includes:
- Evaluating stock option exercise decisions
- Understanding tax exposure at liquidity
- Planning diversification strategies
- Coordinating estate and charitable planning opportunities
How do I reduce risk if most of my net worth is in one company?
Common approaches include:
- Gradual diversification during liquidity events using covered calls
- Tax-efficient selling strategies
- Alignment with long-term financial goals
What taxes will I owe when my private stock becomes liquid?
Tax treatment depends on:
- Type of equity (ISO, NSO, RSU, or direct shares)
- Exercise timing and holding period
- Federal and state tax brackets at the time of liquidity
Example Scenario
An employee at a private company has accumulated significant equity over several years.
The company announces a tender offer, allowing employees to sell a portion of their shares for the first time.
At this stage, planning decisions often involve balancing:
- Immediate liquidity needs
- Tax consequences of selling now vs later
- Expectations for future company growth
- Desire to reduce concentration risk
There is no single correct answer — but there is a structured decision-making process that can help reduce uncertainty.
Our Approach
We help clients evaluate:
- Liquidity event scenarios
- Concentration risk exposure
- Tax implications of equity compensation
- Pre-IPO and pre-liquidity planning strategies
- Long-term diversification planning
Our focus is helping clients make informed decisions before liquidity events occur, when planning flexibility is highest.
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