How To Prepare Your Employees For Your IPO
How to Prepare Your Employees
For Your IPO
A practical guide for founders and leadership teams on getting employees ready, financially and emotionally, for the transition from private equity to public stock.
If you're preparing for an IPO, you've no doubt got a lot on your plate. Taking a company public is a genuinely complex process, and between gathering documents, strategizing for the first trading window, and getting your own financial ducks in a row, it's easy to overlook one important detail: making sure your employees are ready for the transition too.
IPOs are different from acquisitions, which tend to be more straightforward. With an IPO, employees who hold equity have to figure out how to move forward on their own timeline, often while the stock price is still finding its footing. It can be a stressful, emotionally heightened stretch, but it can also mean a meaningful payout for the people who joined in the early days. After a few quiet years, 2026 has brought a wave of high-profile companies back to the public markets, which means more employees than ever are facing this exact moment for the first time. Here's how to help your team get ready.
Encourage Employees to Review Their Equity Compensation Details
Employees who joined recently may not have much skin in the game yet, but long-tenured team members often have a lot to sort through. Understanding their equity compensation details sets the stage for a smoother transition. On top of regular salary, they may be holding a mix of:
- Stock options: the right to buy a set number of shares at a fixed price in the future. Once vested, employees can "exercise" the option, which just means buying the shares. Non-qualified stock options (NSOs) and incentive stock options (ISOs) are taxed in very different ways, so employees will want to get clear on exactly which type they hold.
- Restricted stock units (RSUs): the right to receive a set number of shares once vesting requirements are met. Unlike options, RSUs carry value even if the stock price dips after the grant.
If you're an employer looking to strengthen internal communication around equity, consider inviting Brooklyn Fi to run a workshop or live Q&A with your staff. More on our employee education programs here.
What To ExpectMake Sure Employees Understand the Lock-Up Period
This is pretty much what it sounds like. After an IPO, the lock-up period is a window of time during which shareholders can't sell their shares. Without it, a flood of insider selling could saturate the market and put pressure on the stock price right out of the gate. Lock-up periods typically run anywhere from 90 to 180 days, though the exact terms and any additional trading restrictions vary by company.
Encourage employees to work through a few key questions well before the lock-up lifts:
- When exactly can I sell my shares, and are there any restrictions on timing beyond the standard lock-up?
- How many shares am I actually able to sell at once?
- Is it in my best financial interest to sell some, all, or none? Some employees choose to sell a portion as soon as the lock-up ends and gradually sell more over time to stay diversified. There's no single right answer here, it depends on risk tolerance, financial position, and goals.
A Preparation Checklist for Leadership Teams
Audit your cap table and equity plan documents early
Make sure grant agreements, vesting schedules, and plan documents are organized and accurate well before the roadshow, so employee questions can be answered quickly.
Communicate the lock-up terms directly, in writing
Don't rely on rumor or all-hands Q&A alone. Send a clear written summary of lock-up length, any staggered release schedule, and blackout windows.
Bring in outside financial education, not just legal or HR
Legal teams can explain the mechanics of the offering. A fee-only advisor can explain what it means for an individual employee's taxes and financial plan, which is a different conversation.
Flag the tax withholding gap before shares vest or are exercised
Standard withholding often falls short of an employee's real tax liability, especially for concentrated positions. Give people enough notice to plan for the difference.
Set expectations for volatility after the lock-up lifts
Remind employees that a stock's first months of trading can be choppy, and that a plan made in advance beats a decision made in the moment.
Help Them Keep Their Emotions in Check
News of a forthcoming IPO can get a team genuinely excited, but it's worth reminding people that these things can change on a moment's notice. IPOs get delayed, repriced, or occasionally called off altogether. Even when everything proceeds on schedule, employees may not know their exact trading restrictions until close to the offering itself.
When emotions run high, employees are sometimes tempted to exercise stock options early in hopes of favorable tax treatment. That can make sense in specific situations, but it's risky: if the stock price drops later, they've paid to acquire shares that may be worth less than what they paid. This is exactly the kind of decision worth running by a financial advisor and tax professional before acting, not after.
Suggest They Work With a Financial Professional
At the end of the day, an IPO can be a major liquidity event for employees with a concentrated position in company stock, but the logistics are genuinely complicated. The tax consequences alone can be a headache for anyone taking the DIY route, and a taxable event can be triggered simply by exercising options or selling shares, depending on the type of equity involved.
Add a volatile early stock price into the mix, and emotions can run wild. With an acquisition, the price is fixed and cash is typically exchanged for existing shares and vested options, while unvested shares are usually paid out or forfeited. An IPO is a different animal, and it forces employees to make a series of individual choices under uncertainty. Working with an advisor who understands equity compensation inside and out is one of the smartest moves an employee can make heading into this. What's the right move for their specific situation? How does it affect their broader financial picture and long-term goals? What are the actual tax consequences? This is what equity compensation planning is built for.
After several slow years, the IPO market has picked up meaningfully in 2026, with a strong pipeline of companies testing the public markets again. If your company is part of that wave, now is the time to get ahead of it for your team, not after the roadshow is already underway.
Quick AnswersFrequently Asked Questions
Get Your Team Ready Before the Roadshow
Brooklyn Fi's fee-only fiduciary advisors specialize in equity compensation planning for tech companies and their employees. We help leadership teams communicate clearly, and help individual employees build a plan for their vesting, taxes, and diversification before the lock-up lifts.
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