Employers offer various types of equity awards with varying terms and conditions– these are highly valuable awards, but are often misunderstood. In fact, 43% of employees do not understand their equity compensation plans1, and 30% do not fully grasp the value of their equity compensation2. This lack of understanding contributes to 25% of employees not taking full advantage of their equity3, often due to the complexities of vesting schedules, tax implications, and long-term value. Without clear guidance, these complexities can lead to financial missteps or stress.  

49% of employees feel they need more education about their equity compensation.2

Navigating an IPO as an executive requires specialized financial planning. Cerity Partners provides targeted advisory services to help executives manage new share ownership requirements, public reporting obligations (Rule 144, Section 16 rules), and the implementation of 10b5-1 plans. We also address critical tax considerations for mobile executives—whether expats or those frequently crossing state lines—while strategizing for the lock-up period and short-term liquidity needs. Our phased approach ensures executives are equipped to optimize their financial position before, during, and after the IPO. 

Phase 1: Pre-IPO (6-18 Months Out) 

Early preparation is essential for employees to maximize the benefits of an IPO. Cerity Partners provides the foundation needed to build a financial plan for the journey ahead, offering guidance in key areas. We assist employees in evaluating their equity holdings, acquisition dates, and ownership structures to prepare for potential liquidity. Our advisors explore tax strategies such as Qualified Small Business Stock, 83(b) elections, and early exercise options, preparing detailed tax projections to address AMT implications, state and local tax nuances, and planning opportunities. Employees also receive  estate planning guidance, including advanced strategies like GRATs, IDGTs, and FLPs, as needed. Additionally, we help employees model contingency plans for alternative outcomes, such as delays or changes to the IPO. 

Phase 2: Pre-IPO (0-6 Months Out) 

As the IPO date approaches, employees must fine-tune their financial plans to be ready for immediate action. Cerity Partners provides the support they need to succeed. We help establish accounts to receive proceeds and model initial investment strategies aligned with long-term goals. Our advisors coordinate with company attorneys, appraisers, and board members to ensure stock transfers, sales, and gifting strategies are executed accurately and on time. Additionally, we assist employees in evaluating donor-advised funds, private foundations, and other charitable strategies to help achieve their philanthropic goals. 

Phase 3: During the IPO Event 

The IPO event is a pivotal moment that demands seamless execution. Cerity Partners provides real-time support to help employees make confident financial decisions. We implement tax strategies to minimize liabilities on IPO proceeds, addressing state residency considerations and other tax implications. Our team assists in launching pre-modeled investment strategies, including diversification plans and risk mitigation techniques such as zero-cost collars. For employees with charitable goals, we facilitate the sale of donated stock through donor-advised funds and private foundations, ensuring their philanthropic objectives are achieved. 

Phase 4: Post-IPO 

After the IPO, employees face the challenge of managing new wealth while ensuring it aligns with their long-term objectives. Cerity Partners provides ongoing guidance to help sustain financial success. We create comprehensive financial plans that integrate cash flow, investment strategies, and legacy goals. Our advisors optimize tax and investment strategies with advanced approaches such as tax-loss harvesting, Qualified Opportunity Zones, and exchange funds to offset future gains. We also assist employees in engaging their families in discussions about wealth distribution and philanthropic goals. Additionally, we enhance estate plans with strategies like life insurance and estate tax mitigation to ensure alignment with legacy objectives. 

An IPO brings corporate transitions that can create stress and uncertainty, especially for leadership teams and key employees. Ensuring your workforce feels supported can preserve morale and retention during this pivotal time. 

• What Employers Can Do: Equip leaders and employees with the tools to manage change, including access to experienced advisors and communication support. 

• How We Help: We act as an extension of your HR team, managing the complexities of employee questions and concerns so you can focus on core business priorities. Our holistic approach helps align organizational goals with employee needs during the IPO process.