What to Do When My IPO Lock-Up Expires?

What to Do When My IPO Lock-Up Expires? Transcript:


In this video, I explain three steps to prepare for you IPO lock-up expiring.

Hi, I’m Tom Lo with Vested Financial Planning. I’m here to help you answer the question: What should I do when my IPO lock-up expires?

There are three steps you want to take. Step one is identify any valid near term cash needs. For example, if you have a down payment or emergency fund, sell to fund that.

Step two is decide if you want to hold long-term onto some of your equity. Figure out what percent that is. The max I recommend is five to 10%. Hold that, set it aside.

Step three, decide on a selling plan. There are three versions I recommend. One is sell immediately. Simple. Just sell everything right away. The second version is you sell over time based on the number of quarters. So you may decide, I want to sell 25% a quarter over the next four quarters. The benefit is that you don’t pick the single wrong time to sell and you’re also able to spread the taxes over a couple of years. The third version is sell over time based on the share price. So you can say I’m going to sell more when it’s higher, less, when it’s lower, you just set price targets and what percent you’ll sell.

Those are the three steps to take. Once you have the cash, you just want to invest it in a broadly diversified globally allocated portfolio. If you want to talk about your specific situation, then please come to my website at vestedfinancialplanning.com and schedule a free virtual consultation. Look forward to meeting you!

Financial Advisor, CFP at Vested Financial Planning

After 20 years working for companies including eBay, Yahoo!, Intuit, and startups, I made a career change into the financial world as a fee-only financial planner 9 years ago. I earned my CFP®, spent a few years at a boutique fee-only firm in San Jose, worked 2 1/2 years at a leading wealth management firm in San Francisco, and then left to build the firm I wish had existed when I was working as a tech professional.

My mission is to help other Silicon Valley professionals make the most of their employee equity to help them reach their financial goals.

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