What To Do When Your Company Goes Public
What To Do When Your Company Goes Public
A 9-step financial plan for RSUs, ISOs, NSOs, and ESPPs: vesting, lock-ups, 10b5-1 plans, and the tax bill that follows.
Going public changes your equity from a paper number into a real, taxable, sellable asset, and that shift comes with hard deadlines, not vibes. If your company just filed an S-1, or the group chat is already speculating about one, that "someday" equity just became real.
The nine steps below split into two phases: five moves to make before the IPO prices, and four to make in the weeks after your lock-up expires. Get the timing wrong on any of them, and mistakes quickly become very expensive.
5 Things to Do Before Your Company's IPO
The framework below applies whether you're holding RSUs, ISOs, NSOs, or ESPP shares, and whether your company goes the traditional IPO route or a direct listing. Read carefully, while the underwriters and lawyers are still working out the details.
Pull Your Full Equity Grant History
Log into your equity platform (Carta, Fidelity Stock Plan Services, Morgan Stanley, E*Trade, or Schwab Equity Award Center are the most common) and export every grant: RSUs, ISOs, NSOs, and ESPP purchases, along with grant dates, vesting schedules, and strike prices.
Understand Your Lock-Up Period
A lock-up period is a contractual restriction, typically 90 to 180 days, during which employees and insiders cannot sell shares after the IPO. Underwriters set that date, not you, so there's no negotiating it, but it's disclosed in the S-1 and again at pricing, so there's no mystery either. Put the expiration date in your calendar the day it's announced. This is pretty serious. Violating your lockup restriction can result in insider trading.
Model Your Tax Exposure Before Shares Vest or Are Exercisable
RSUs are taxed as ordinary income at vesting, based on fair market value on the vesting date, not whatever number the IPO pop headline is quoting. ISOs can trigger Alternative Minimum Tax exposure even without a sale. NSOs are taxed as ordinary income at exercise, full stop. Run these numbers before the IPO, since most companies withhold RSU taxes at a flat rate that often falls short of what higher earners actually owe. Read more here: Common RSU Misconceptions
Decide Whether an 83(b) Election Applies to You
If you hold early-stage restricted stock (not RSUs) subject to vesting, a Section 83(b) election lets you pay tax on the value at grant rather than at each vesting date, with a strict 30-day filing window from the date of grant. This mostly applies to founders and very early employees, but it's worth confirming with a tax professional if your offer letter included restricted stock. If your company is filing an S-1, it's probably too late for an 83(b) but you hopefully filed one when the shares were first granted. Read more here: How To Do An 83(b) Election
Set Up a Diversification Framework in Advance
Decide, before the lock-up expires and everyone in your Slack is either euphoric or panicking, what percentage of your net worth you're comfortable holding in a single stock. Many financial planners use a concentration threshold, often somewhere in the 10 to 20 percent range of investable net worth, as the trigger point for systematic diversification. At BKFi, every client gets a customized legacy and trading plan that is informed by tax projections created by our in-house CPAs. Set that number now, while you're thinking clearly. It's nearly impossible to stay rational when your stock price starts jumping up and down on the public market.
4 Things to Do Immediately After You Go Public
Once shares start trading, the clock moves faster. These are the moves to make in the days and weeks right after the lock-up expiration is confirmed.
Confirm the Exact Lock-Up Expiration Date and Trading Window
Lock-up expiration dates can shift: underwriters have discretion to release insiders early or extend restrictions. Confirm the final date directly with your equity plan administrator rather than relying on the original S-1 disclosure, and check whether your company's post-IPO trading windows align with the lock-up date.
Set Up a 10b5-1 Trading Plan Before You Have Material Nonpublic Information
A 10b5-1 plan is a pre-arranged, written trading plan that lets insiders sell shares on a predetermined schedule, providing an affirmative defense against insider trading claims. It has to be adopted while you're not in possession of material nonpublic information, which typically means setting it up during an open trading window. Many companies only allow the largest shareholders to create 10b5-1 plans (like the CEO and CFO), but we have noticed a trend at companies like Etsy and Datadog that allows almost any employee to enter into these pre-arranged trading agreements. Read more here: How Are 10b5-1 Rules Changing?
Plan for the Tax Bill Before It Arrives, Not After
RSU vesting right after an IPO frequently creates a large ordinary income event, and the standard 22% federal supplemental withholding rate rarely covers what higher earners actually owe. Model your total tax liability now, factoring in state tax, and set aside cash or plan a sell-to-cover strategy rather than discovering the gap at filing time.
We see this a lot. If you live in an income tax state like New York, often your state tax withholding is TOO much and you will be due a nice refund. But at the same time, you are underwithheld at the federal level. So you end up with this lopsided tax situation where you're waiting for thousands of dollars in a refund from New York while owing the IRS. And no, unfortunately, the jurisdictions don't talk to each other so you can't apply your state overpayment to your federal balance.
Start Executing Your Diversification Plan on Schedule
Once the lock-up expires and your trading window opens, follow the diversification framework you set before the IPO price. Don't mess with it just because the stock had a good week. A staged sell-down, a fixed percentage on a schedule rather than trying to time the stock, is the approach most 10b5-1 plans are built around, precisely because "I'll sell when it's higher" is not a plan, it's a fool's errand.
How to Think About Stock Volatility After an IPO
Newly public stocks typically experience wider price swings than established public companies, driven by lock-up expirations, initial earnings reports as a public company, index inclusion timing, and thinner analyst coverage in the first year. That volatility is a structural feature of the first 12 to 18 months of trading. It's the market still figuring out what to make of you, not necessarily a verdict on the underlying business.
But structural or not, holding a large single-stock position through this window carries more risk than the same position would a few years later, once trading volume and analyst coverage settle down. Treating the lock-up expiration as a deadline for a decision, rather than an invitation to wait and see how high it goes, is the approach most financial planners recommend to equity comp clients.
Trading PlansWhat Is a 10b5-1 Trading Plan, and Do You Need One?
A 10b5-1 plan is a written, pre-committed trading instruction, for example "sell X shares on the first trading day of each month," that removes discretion from the moment of the trade. You need one if you're an insider (which often includes employees with regular access to material nonpublic information, not just executives) and you want to sell shares on a predictable schedule without each sale being second-guessed as improperly timed.
Not every employee is legally required to have a 10b5-1 plan, but many companies encourage broad adoption post-IPO because it simplifies compliance monitoring across the whole employee base. Employees at reporting companies increasingly set these up in the first open window after the lock-up expires, rather than waiting.
You can also create a "mock 10b5-1" plan that lists your trades. At BKFi, once you sign off on the trading plan, you can instruct your investment manager to sell the stock for you at the agreed-upon cadence.
What to Prioritize in Your First Year as a Public Company Employee
The period between your S-1 filing and your first full year as a public company employee is when the most consequential, and most reversible, decisions get made. Four things typically matter most.
Concentration Risk Management
Keep diversifying on the schedule you set, especially after the initial post-lock-up selling window closes. New RSU tranches keep vesting and can quietly rebuild concentration if left unmanaged. You're selling, but you're also getting new grants!
Quarterly Tax Withholding Checkpoints
Revisit your withholding and estimated tax payments each quarter rather than waiting until year-end, since additional vesting events and any option exercises can shift your bracket. If you don't already have a great CPA, you need one now.
AMT and Cost Basis Tracking
If you exercised ISOs, track your cost basis carefully. The basis for regular tax purposes and for AMT purposes often differ, and getting this wrong is one of the most common equity comp filing errors.
Estate and Beneficiary Updates
A liquidity event is a natural point to update beneficiary designations, review whether a trust structure makes sense for concentrated holdings, and confirm your accounts reflect your current wishes. This is the one everyone skips because it's not as fun as the tax math. Your estate plan should also mention what happens to your unvested equity. It's also important to consider what happens to your equity in a marriage, whether you're in one now or preparing to enter into one. A prenup is something you may want to consider.
Frequently Asked Questions
Lock-up periods are typically 90 to 180 days, though the exact length and any early-release provisions are set by the underwriters and disclosed in the S-1 and prospectus.
Yes. RSUs are taxed as ordinary income at vesting based on fair market value on that date, regardless of whether you sell the shares immediately or continue holding them.
ISOs can qualify for favorable long-term capital gains treatment if holding period requirements are met, but often trigger AMT exposure at exercise. NSOs are taxed as ordinary income at exercise, with no AMT consideration. Read more here: ISO vs NSO: Decoding Stock Options in a Nutshell
Not necessarily. A staged, scheduled diversification plan (often via a 10b5-1 plan) is more common than selling everything on day one, since it avoids trying to time a single volatile trading window.
Many employees handle the basics themselves, but the combination of ordinary income tax, AMT exposure, withholding shortfalls, and concentration risk hitting in the same calendar year is where a fee-only fiduciary advisor typically adds the most value. If you've got more than $500,000 worth of company stock, a financial advisor can be an extremely valuable resource — especially one that specializes in this area. We have some good news: you're in the right place.
This article is for educational purposes and is not personalized investment, tax, or legal advice. Your equity, your tax situation, and your goals are unique, so talk to a qualified advisor before making decisions.
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BKFi works with tech professionals navigating this exact stage of equity compensation every day, from modeling AMT exposure before you exercise to building the post-lock-up diversification plan that turns "I have a lot of company stock" into an actual financial plan.
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