Stock Option and IPO Planning

Darrow Wealth Management regularly works with employees who have incentive stock options or nonqualified stock options. Through our ongoing advisory relationship, we can help you make a plan to exercise and diversify stock. If your employer is going public, merging, or getting bought out, work with an advisor experienced with strategic stock option planning and the tax implications.

If you’re expecting sudden wealth from a liquidity event or IPO, we’ll work to help you develop a strategy to make the most of the windfall.

Financial Advisor for Employee Stock Options

Especially for founders and early employees, stock options can create a major liquidity event that transforms your financial life. To maximize the opportunity, it’s critical to get the right team of advisors in place before making irreversible decisions with your shares.

Our team of stock option advisors can work to help you:

  • Plan for an IPO or acquisition
  • Understand the differences in equity compensation at a private company vs a public one, and planning opportunities therein
  • Discuss your goals to identify how to best utilize stock options in your financial plan or retirement plan
  • Develop an exercise strategy with an analysis to consider tax implications (like the alternative minimum tax) and risks of holding a concentrated stock position
  • Develop a liquidation strategy, factoring in risk, cash needs, and taxes and considering different grants
  • Coordinate the approach with your tax advisor and estate planning attorney
  • Decide on a strategy to best use the proceeds, including funding multiple goals and investment management services to help you diversify sudden wealth
  • Understand how vested and unvested stock options may be treated if you leave the company or retire
  • Explore cashless or sell-to-cover exercises of stock options
  • Implement a multi-year diversification strategy through an ongoing wealth management advisory relationship
  • Consider ways to further your charitable or legacy goals

 

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Financial advisor for IPO stock options

Wealth Management Services

Darrow Wealth Management is a fee-only financial advisory firm and full-time fiduciary. We regularly work with employees and executives with stock options, particularly after an IPO, acquisition, or direct listing.

By integrating financial planning with investment management, our goal is to help busy professionals build and grow their wealth.

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Nationally Recognized Wealth Manager

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Media appearances by Kristin McKenna, CFP®, Managing Director, Darrow Wealth Management

Publications above reflect media organizations that have quoted and/or published articles authored by Kristin McKenna and should not be misconstrued as a current or past endorsement of Kristin McKenna, Darrow Wealth Management, or any of its advisors. Please refer to the media page for more information and links to published works. 

Stock Option Insights: From Acquisitions to IPOs

IPOs after lockup
IPO

The Stock is Down, But You’re in a Post-IPO Lock-up

More companies entered the public markets in 2021 than any other year on record. From traditional IPOs or SPACs, and even direct listings, it was a banner year for exits. Unfortunately, the sharp pullback in the equity market to start 2022 is leaving employees and shareholders subject to a lock-up agreement in…
Qualified Small Business Stock - Section 1202
Business owners

Qualified Small Business Stock Gain Exclusion (Section 1202)

If you invested in a startup or small business (founders, employee exercise of stock options, business owner), you need to know about qualified small business stock. If eligible, you may be able to exclude up to 100% of the gain from federal taxes when you sell your shares. Qualified small…
financial advisor for executives
Stock options

When to Exercise Stock Options

When should you exercise stock options? With stock options, employees have the right (not obligation) to buy the shares (called exercising). Vesting is often the earliest employees can exercise, though early exercises are possible. If you stay with the company, you'll likely have 10 years from grant to buy the…
Tax law changes
Business owners

Expecting a Windfall from Stock Options or Selling a Business? New Tax Proposals May Cost You.

Tax planning for a sudden liquidity event just got more complicated. If you're expecting a big windfall from selling a business or employee stock options after an IPO or acquisition, you may be following the Build Back Better tax proposals. As currently drafted, the bill introduces new taxes on high…