RIPPLING: HOW TO PREPARE FOR YOUR IPO

A Special Preparation Guide Specifically Designed for Rippling Employees

Navigating the journey towards an IPO is no easy feat, and we’re here to help you prepare effectively. Whether it's managing taxes, mitigating risks, or preparing for unexpected surprises, you need to have a game plan! This guide and video will walk you through key considerations and actionable steps to take before Rippling’s IPO.

Have questions about your specific situation or need help preparing? Get started and book a discovery call with our team (we’ve helped many clients who are feeling the same way you are right now!)

 

Going public comes with a lot of stress, complexity, and uncertainty. The good news? With a little planning and expert advice, you can be prepared for what’s ahead.

IPO Timeline: Know What’s Coming

An IPO doesn't happen overnight. Understanding the key milestones in the IPO timeline can help you stay ahead and avoid last-minute chaos. Timing is crucial as you plan for when and how you’ll exercise your stock options.

 

What to Expect During the IPO

Prepare Yourself For:

  • Conflicting Information: You’ll hear different things from multiple sources.

  • Last-Minute Changes: Trading restrictions or unexpected issues could arise right before the IPO.

  • Calls to Transfer Agents/Brokerages: You may need to open brokerage accounts or deal with unfamiliar firms.

  • Frustration with Technology: The tech systems involved may be outdated or difficult to navigate.

  • Bad Data: Incorrect or missing data can create delays or cause errors.

 

How to Prepare for the IPO

Here are some essential steps to take:

  • Save Monthly PDF Statements: Make sure to save your own records in case data goes missing.

  • Understand Lockup Periods: There are typically restrictions on exercising stock options just before a liquidity event.

  • Expect Taxes: Even with favorable capital gains treatment, you could owe up to 38% in taxes (24% federal, 14% state).

Qualified Small Business Stock (QSBS)

This is a potential tax benefit, but be sure to check your eligibility and work with a tax professional to fully understand how it applies to your situation.

  • Getting Locked Out: Make sure you save monthly PDF statements because your account will most likely lock you out until JUST before the event.

  • Last-Minute Trading Restrictions: You may not know your exact trading window until just days before the IPO.

  • Misconceptions About Tax Breaks: There’s no magic bullet for reducing taxes. Make sure you’re prepared to pay the required rates.

  • Missing Basis: This can lead to overpaying taxes. Keep all records and ensure your cost basis is reported correctly.

  • Market Behavior: Stock prices on the first day of trading can be volatile, especially with early excitement from retail investors.

Lessons Learned from Other Public Offerings

  • The first day of trading can offer the best short-term price, but long-term performance may vary.

  • Timing of stock price movement often doesn't start until later in the day (East Coast lunchtime).

  • Remember: Past performance is not indicative of future results.

SPAC Considerations

If a SPAC is involved, be sure to understand the specific implications and differences compared to a traditional IPO.

What to Know Ahead of Day 1

  1. Know your trading restrictions and potential lock-up periods.

  2. Understand tax implications and make a plan for managing your shares.

Rippling Employee Tips

Long-Term Employees

  1. Ensure your financial and brokerage accounts are updated and prepared ahead of time.

  2. Stay aware of lock-up periods and plan for taxes.

  3. View key considerations for ISOs, NQOs, and RSUs (see below):

Newer Employees

  1. Familiarize yourself with the IPO process and understand the implications of your equity.

  2. Get clear on trading restrictions and lock-up periods before making any plans.

  3. View key considerations for double-trigger RSUs (see below):

Resources

Useful Resources & Your Next Steps