ISOs have good tax benefits. Sometimes it’s better to ignore them.

Block Woman is standing over a background of a printed Greek text with a white question mark above the top of the Block.

ISOs can give you a nice tax treatment.

How? If you exercise an ISO and hold the share for at least a year before you sell it, then you will pay a lower tax rate than if you had instead:

  • Done the same thing with an NSO, or
  • Exercised an ISO and sold the share in under one year.

This fact means that most people (including us financial planners) generally recommend that you exercise ISOs and then hold the stock for at least a year before selling it. This is the only way you get access to those sweet, sweet tax bennies.

If the exercise price is really low (let’s say 10¢), that strategy often makes sense because you’re not putting much money at risk when you exercise the stock. But if the exercise price is substantial (let’s say $8, more on that price later), then maybe it doesn’t.

In other words, sometimes it makes every bit of sense to treat ISOs just as you would an NSO: exercise and sell ASAP. Don’t try to take advantage of the tax benefits.

Note: For the most part, this discussion applies to options in a public company. You can sell shares in a public company on the stock market, no problem. Selling shares in a private company, if even allowed by your company, is far more complicated and more expensive, because the private market is far less transparent and efficient.

Also note: Not many public companies award new ISOs, so in practice, this blog post is for people who worked at a company when it was private, were awarded ISOs at that time, the company has since gone public, and you still have exercisable ISOs.

ISOs Reward “Exercise-and-Hold,” Unlike NSOs

So that my comments later in the blog post make sense to you, let’s make sure we all understand how ISOs work.

Let’s say:

  1. You exercise an ISO. You have to pay the exercise price, $8. The price at the time of exercise is $10.
  2. When you exercise an ISO, you can avoid any sort of tax liability by exercising few enough to stay under the Alternative Minimum Tax (AMT) threshold. So, let’s say you exercise few enough, and so all you pay upon exercise is the exercise price.
  3. After a full year, you sell the stock for $14, and all the gain from the exercise price to the sale price ($6) is taxed as long-term capital gains (which is generally a lower tax rate than your “ordinary” income tax rate).

By contrast, non-qualified stock options (NSOs) operate this way:

  1. You exercise an NSO. You have to pay the exercise price, $8.
  2. The moment you exercise the option, you owe ordinary income tax on the gain from the exercise price to the current price of the stock ($10). So, you owe ordinary income tax on $2.
  3. Whether you sell the stock immediately or you hold it for 5 days, 5 months, or 5 years doesn’t affect the fact that you owed taxes the moment you exercised.
    1. If you sell it immediately, you pay no more tax.
    2. If you sell the stock after a full year for $14, then you own long-term capital gains tax on $14-$10 = $4.

So you can see that, handled correctly, ISOs will subject all of the gain above your exercise price to the lower long-term capital gains tax rate. NSOs will subject some of the gain above your exercise price to ordinary income tax and the rest to the lower long-term capital gains tax rate.

All else equal, we’d rather have all the gain subject to a lower tax rate, which is a vote in favor of ISOs over NSOs.

As for NSOs, my advice is almost always: Exercise and sell ASAP. There is no tax benefit to exercise and holding. The only reason to hold on to the shares would be your faith that the company stock price will increase. And if that’s the case, then you might as well hold on to the options, because as long as you hold the option, you’re not putting any money at risk and you’re still participating in the possible upside of the stock. You can see my thoughts about when I think is an appropriate time to exercise (and sell) your NSOs.

Yet You Might Still Want to Exercise and Sell Immediately.

When you exercise options, you pay two costs:

  1. The exercise price
  2. Taxes you pay on the exercise

If the stock price continues to rise after you exercise, great! You have a positive return on that investment cost. If the stock price falls, however, you can end up losing money, even if you get a lower tax rate because it’s the fancy kind of option (aka, ISO).

You can avoid taxes entirely with ISOs, if you plan it well enough. (I recommend working with a CPA to figure this out.) For the sake of simplicity, let’s assume going forward that there is no tax bill upon exercise.

If the exercise price is only 10¢, and you have 20,000 ISOs, heck, the price to exercise them all is only $2000. Which, for most people I work with, is money they can afford to lose.

But…

What if the exercise price is $8, as it is for a client of mine whose company recently went public and she has a bunch of these lovely ISOs at that exercise price?

Exercising all her ISOs, even if we assume no taxes, will cost her $160,000.

Uh…I work with some high-income and/or high-wealth people, and I don’t think any of them thinks “$160k? Pshaw. Pocket change.”

So, this client has decided, for now at least, to not exercise any of her ISOs. She’s going to work her way through her NSOs (exercising and selling ASAP), and each year we’ll reevaluate whether she wants to put any money at risk by exercising and holding her ISOs.

If we use up all of her NSOs and the client still doesn’t want to risk any of her existing wealth on exercising and holding the ISOs? Then we’re just going to treat them exactly as we have the NSOs: exercise and sell ASAP.

Will she pay a higher tax rate? YES

Will she eliminate any risk of losing money? ALSO YES

Has she considered and is she fine with that trade off? ALSO ALSO YES

Am I fine with that trade off, as her planner who only wants what’s best for my client? YES. In fact, I think it’s highly rational.

So if you have ISOs, and you know all about how awesome they are tax-wise…that doesn’t mean you have to take advantage of their better tax treatment. You could completely ignore their tax benefits (by selling right after exercising) and still be confident that you made a rational, pragmatic decision.

Do you want to feel more confident about the choices you’re making with your stock options?

A Case Study in Navigating an IPO

Block Woman surveys white puzzle pieces

Do you want to create a smart strategy for your company’s IPO, but you have options and shares and RSUs, you don’t know how they fit together, and it all just seems irreducibly complex?

Maybe a case study will be helpful, to illustrate how one woman came up with a good solution for her specific life and equity details. My client, let’s call her Mia, has worked for a company, let’s call it FinTech, Inc., for five years. Earlier this year, it went public. Together we created a strategy that she has partly executed so far.

We abided by these priorities when creating the strategy for Mia. This is likely a healthy starting point for you, too.

  1. Define what this money is for in her life (i.e., define her essential goals; what does she need to feel safe, to feel fulfilled).
  2. Sell enough company stock to fully fund those goals.
  3. Minimize taxes while doing this.
  4. Consider keeping company stock only to the extent she doesn’t need the money for an essential goal.

To make sure you are really understanding the meaning of “priorities” here: minimizing taxes is less important than selling company stock to fund her goals. Yes, she might make some tax-inefficient decisions along the way!

Start with the Most Important Thing: What Is This Money for?

Some people already have a list of things and experiences they want to spend money on: buying a house, funding a kid’s college savings account, doing a remodel, taking a sabbatical, etc. Those people should focus on getting enough money out of company stock and into cash or a diversified portfolio ASAP, invested in a way and in an amount that is appropriate for those goals. 

Clearly defined goals make this part of the game pretty easy. In my experience, it’s really easy to convince someone to sell their company stock if they get a house out of it, or a sabbatical, or something that is personally meaningful to them. Convincing them to sell their stock when they don’t have any well-defined need for it…well, it’s less convincing.

This is the situation Mia was in. She has no such clearly defined goals. She has more of a “I want to have strong finances so that I have more choice and flexibility in the future” attitude about money.

In my world, that meant selling a bunch of the company stock (not necessarily all of it, but a bunch) to put it in a robust cash emergency fund and a diversified portfolio that will be less volatile in the future than a single stock would be. Thankfully, Mia was amenable to that. She didn’t hold any strong feelings about the stock.

So, she had an overarching strategy for her work with company stock: Get enough money out of the company stock to build:

  1. A robust cash cushion. (This provides near-term flexibility and protection.)
  2. A retirement portfolio big enough to give her a robust level of financial independence. Not fully financially independent, but financially independent enough. She targeted achieving “Coast FIRE” (having a big enough retirement portfolio that she wouldn’t need to save any more to it), assuming she’d retire16 years from now. (This provides long-term flexibility and protection.)

She could assign a dollar value to each. In Mia’s case, she decided to make it:

  1. 1 year’s worth of expenses, in cash ($100k)
  2.  Looking at her existing retirement portfolio, she needed an additional $700k to be Coast FIRE.

She needed $800k, after tax, out of this IPO. (Yes, these are both somewhat arbitrary targets. But also reasonable, a combination that characterizes many important financial decisions.)

Between the two, Mia will now have way more freedom to make life and career choices that aren’t motivated primarily by “how do I make a lot of money?”

If you’re doing this yourself, write these goals down and put a dollar amount next to them. It’s remarkably helpful, in my experience, to have a visually clear list of the dollar target and the “why.”

Rules of the IPO

FinTech, Inc. had a fairly standard (for the modern era) IPO setup:

  • Double-trigger RSUs fully vested on IPO day.
  • Employees couldn’t sell any shares until six months after IPO day (i.e., there was a six-month lockup). They could exercise options but would have to hold the shares after exercise).
  • If the stock price hit certain desirable targets, there would be a mid-lockup, one-week-long trading window.
  • During that limited trading window, employees could sell 25% of their total ownership as measured on IPO Day. We calculated that Mia “owned” 100,000 shares (between outright shares, vested options, and RSUs vesting on IPO day). She was therefore allowed to sell 25,000 shares.

Strategy in the Years Before the IPO

In each year leading up to the hoped-for-but-we-don’t-really-know IPO, Mia exercised some ISOs. If you have really cheap options, the upper boundary of this exercise should likely be the number of ISOs you could exercise without triggering Alternative Minimum Tax.

In Mia’s case, the exercise price was kinda pricey ($10). So, Mia chose an amount of money that she felt good losing entirely (because that’s what she risked by exercising options in a private company, especially one with no specific plans for a liquidity event), and she exercised as many options as that would buy. Turns out, that was always beneath the AMT threshold. She ended up exercising only a small fraction of her ISOs by the time the IPO rolled around.

(By the way, despite the potential tax awesomeness of exercising ISOs early, it was reasonable for Mia to exercise so few ISOs. Any money you put into exercising private-company options is money you risk losing all of. It is, in fact, entirely rational to delay exercising all options until you can also sell the resulting shares. Although it limits your upside (because your tax rate will be higher), it eliminates your downside.

Going into the IPO, she had:

Basically, she had every type of equity comp you could imagine. How should she make the best decisions across the entire suite of equity comp, not just for one type at a time?

Strategy Right Before the IPO: Choose RSU Withholding

Leading up to the IPO, Mia had one big decision to make: When her RSUs vested on IPO day, she could default into the statutory 22% withholding rate for federal income taxes on the RSU value, or she could choose to withhold 37%.

Even though Mia didn’t have much in the way of RSU shares—which meant that this choice didn’t involve a lot of dollars—she chose to have 37% withheld. Why?

  • This reduced her “concentration risk” sooner. We had no idea what was going to happen to the stock price before she’d be able to sell any shares. If the stock listed at $50 and dropped to $20, she would have effectively “sold” at that higher $50. Yay! Even if the stock price ended up increasing, she at least didn’t have to worry about it in the meantime.
  • Even though her RSU income wasn’t going to be big this year (meriting the highest tax-bracket withholding), she had plans for exercising NSOs, and that would make her income high (and therefore tax rate high) this year.

Strategy During the Lockup and Right After: Turn Company Stock into Cash ASAP

After IPO Day, when the rules were in place and we had some sense of the stock price after the company went public, that’s when most of the strategery could usefully happen.

RSUs that Vested on IPO Day

When the special, limited trading window opened up in the middle of lockup, she wanted to diversify (start selling).

Because Mia’s RSUs were “double trigger,” (which is the norm for private-company RSUs), all of Mia’s 6000 time-vested RSUs had fully vested on IPO Day. Almost 50% of the RSUs were withheld (between state income tax and 37% federal tax), so Mia then owned 3000 shares from that vesting.

Leading up to the limited trading window, she didn’t know exactly what she was going to do with those shares. We made this plan:

  • If the company stock rose in price since the IPO, she’d keep it, so she wouldn’t pay the higher short-term capital gains tax on that gain, as she’d only held the shares for a few months. We’d have to sell more of other kinds of shares to fill that 25,000.
  • If the company stock fell in price since the IPO, we’d sell it. She wouldn’t incur any tax bill (although wash sales would likely mean she couldn’t benefit from that tax loss until future years). This would mean we’d sell fewer of the other kinds of shares to fill that 25,000.

As it turns out, the stock price fell from IPO to limited trading window. It had IPOed at $40 and was down to $30, so she sold those 3000 shares she had from IPO Day RSU vesting. These ended up being the tax-wise cheapest shares to sell…because she sold them at a loss. 

She had now sold 3000 of the permitted 25,000 shares.

Shares She Already Owned

Mia owned 4000 shares of company stock. She sold them all during the limited trading window.

Because Mia had already owned these shares for at least one year, she would get the lower, long-term capital gains tax rate when she sold them. These were the second cheapest shares tax-wise to sell.

Had Mia had significant charitable intentions, she might have kept these shares to donate (instead of cash), because that’s tax awesomeness.

One thing that didn’t apply to Mia but might to you: If you acquired the stock early enough in the company’s timeline, it might be Qualified Small Business Stock (QSBS), which would eliminate most or even all federal capital gains tax on the gain when you sell. So, before you sell, make sure you know the stock’s QSBS status!

She had now sold 7000 of the permitted 25,000 shares.

Exercisable NSOs

To sell the remaining 18,000 of the permitted 25,000 shares, she looked to her NSOs. Because you owe income tax (on the “spread” between exercise price and fair market value) the moment you exercise, it costs a lot of money to exercise 18,000 NSOs ($10 x 18,000; plus taxes on the spread). But because she sold at the same time (and she could set aside some of the cash proceeds to pay the taxes), Mia didn’t put any of her existing wealth at risk.

You should know that there is no good reason to exercise and hold NSOs (in a public company). So, when Mia exercised, it was assumed that she would also sell. Read my favorite blog post on this topic.

We also took into consideration the idea of the “leverage” her options provided (leverage = exercise price / fair market value). NSO leverage isn’t a particularly intuitive concept (at least, not to me!) but it boils down to this: It would be silly to exercise the options at $10 if the fair market value were only $11. You only get, in a sense, $1 of value. That leverage is high ($10/$11 = 91%). It’s better to wait until you get more bang for your exercise buck.

During the trading window, however, the stock price was $30, so leverage was 33% ($10/$30). Leverage below 40% makes it worthwhile, as a rule of thumb.

RSUs as They Vest, Now in a Public Company

One of the challenging transitions when your company goes from private to public is how your RSUs work. When your company is private, usually you have no control over RSUs and do nothing. It is just Future Fantasy Money. Once your company is public, when those RSUs reach their vesting date…

  • They immediately turn into stock.
  • They are treated as taxable income.
  • You can sell them for actual dollars.
  • You probably don’t have enough taxes withheld on the vest and will therefore end up with surprise tax bills.

The best practice for RSUs, in public companies, after they vest is: Sell ASAP. And this is what Mia is doing. Remember, there is no tax benefit to holding RSU shares after they vest. No really.

Remember, as long as Mia remains an employee, she will continue to get new stock via RSUs vesting. So, whatever the fate of the company stock, she will share in it via the value of those RSUs upon vest, even if she were to sell all the rest of her stock.

Exercisable ISOs

I consider ISOs the most complicated of equity comp types, so I leave it for last, both in this blog post, and in Mia’s strategy in general.

ISOs have this awesome tax treatment of not incurring tax at exercise as long as you stay under the Alternative Minimum Tax threshold. (Remember that this is in contrast to exercising NSOs; tax is always due when you exercise NSOs.) Also, as long as you hold the stock for at least a year after exercise, you’ll get the lower long-term capital gains tax rate on the gain when you eventually sell.

Add on top: That AMT threshold, in general, goes up the higher your ordinary income is. So, with the RSUs that vested at IPO and continue to vest every quarter now that the company is public, and especially with the exercise of NSOs, she now has a very high ordinary income this year.

What does that mean for Mia’s ISO strategy? It allows her to exercise (and hold…to get the tax benefits) a bunch of ISOs with no tax bill.

How many? Welp, this is where she brought in her CPA and asked them to model how many ISOs Mia can exercise without triggering AMT. Thank you, CPAs with equity-comp expertise and a service model that includes an annual tax projection!

I still advised Mia to only exercise as many ISOs this year as she could without triggering AMT. Why? 

  • She doesn’t plan to leave the company in the near future, so she should have future years in which to continue to exercise the ISOs. (After you leave a company, your ISOs might outright expire. But if they don’t, they will convert, by law, to NSOs after 90 days.)
  • This keeps her risk of losing money with the company stock lower. Sure, she’s putting that exercise-price money at risk, but she’s not also putting tax money at risk.

Yes, this will add to her collection of company stock (in conflict with our general goal of reducing the concentration). She is knowingly increasing concentration risk because the possible tax benefits are so good. By itself, that likely wouldn’t be enough, but this is only one part of a larger strategy of sell, sell, sell.

I find this bit of mental accounting helpful: Mia isn’t putting any of her existing wealth at risk. The money she’s risking by exercising and holding ISOs is money she got from selling other FinTech, Inc. stock.

[Side note: AMT is not to be avoided at all costs under all circumstances. There are situations in which exercising a bunch of ISOs and triggering AMT is a reasonable choice. If you pay AMT this year, you get an AMT credit and it’s possible to get that credit back in future years. That said, it still puts you at higher risk of loss. You’re spending more money to buy stock…whose price might then drop.]

Strategy in 2026 and Beyond: She Can Be a Bit More Nuanced

Remember our high-level strategy:

Priority #1 = Sell enough stock to fund goals.
Priority #2 = Minimize taxes.

What does this prioritization look like in practice? In Year 1, sell sell sell. In Years 2+, once she has funded her goals from those Year 1 sales, she can choose to slow down the sales and let tax considerations (or risk-taking) drive the bus more often.

What will she do with her RSUs? Mia will continue to sell them as they vest in 2026 and beyond, as long as she stays at FinTech, Inc. Because, to repeat the message, there is no tax advantage in holding on to RSUs after they vest.

What will she do with the shares from exercised ISOs? These are only shares she will hold. She’s going to hang on to them for a full year (to get the lower tax rate on the gains) and then sell. If Mia develops a charitable plan in the meantime, these ISO shares (assuming the fair market value is higher than their $10 cost basis) will likely be the things she should donate to charity, not cash.

What will she do with her exercisable options? Each year she starts the NSO/ISO dance again:

  1. She exercises (and sells) some NSOs (as long as leverage < 40%).
  2. If she wants to prioritize taxes over diversification, she could reduce the number of NSOs she exercises in order to keep her income below a certain tax rate. (Her CPA can help her calculate just how many NSOs that is.)
  3. Then she sees how many ISOs she can exercise (and hold) without triggering AMT.

She now has much more flexibility in how she treats company stock:

  • Keep more: If she has an emotional connection to the stock, or doesn’t want to sell everything because “what if?!”, then cool, let’s leave more NSOs unexercised or let’s keep some exercised ISO shares past the one-year date.
  • Keep less/none: Statistically speaking, any concentration in a single stock increases your risk without a concomitant increase in your reward. 100% diversification (i.e., getting out of all of her stock) is her best chance of having successful long-term investing. This, by the way, is where I stand. But I don’t impose this perspective on clients when their life goals don’t require it.

There’s more detail to the “2026 and beyond” strategy, but I’m keeping things short and simple here for the sake of digestibility.

Here’s a summary of Mia’s strategy by type of equity:

Feeling overwhelmed? I’m not surprised.

Have a better sense that all these pieces can and should fit together? I hope so.

Convinced of the primary importance of clarifying what this money is for in your life, and of orienting all your decisions around supporting that? Good.

If you want to work with a financial planner who can help guide you through your IPO in a way that feels right and true, reach out. Even if I can’t help you myself, I Know People.

Is Your Company Going Public? Stop Obsessing About Taxes. Start Obsessing About Your Life.

Block Woman stands next to a pile of coins topped by a colorful bouquet of paper flowers.

It’s been a long few years, but your company is finally having its IPO. Lucky you!

If your company is going (or has recently gone) public, then perhaps you are beset by anxiety about “How do I do this right?” You recognize that this is probably a once-in-a-lifetime opportunity to make real wealth in a very short period of time, and you don’t want to screw it up.

And ‘tis true! On all counts. It’s rare to work at a company that goes public, especially one that goes public successfully. It probably won’t happen to you again. And there are a lot of ways to screw this up.

But what I don’t want you to think is, “In order to do this right, I have to be sure to pay as few taxes and make as much money as possible.”

It’s possible those things will coincide with “doing it right.” But they’re not sufficient. Hell, they’re not even necessary.

If I lost a few readers with that comment, okay, I’m not surprised. Because this simply isn’t the way we generally think about IPOs. We generally think about Money Money Money! Taxes Taxes Taxes!

What I would very much like you to think about instead is Life Life Life! Purpose Purpose Purpose!

Most content I see or advice I hear about IPOs or anything equity comp-related is about technical stuff. Minimizing taxes. Diversifying your portfolio. Etc.

And that stuff is indeed really important to think about! I just think it tends to distract us from the main point (“what is this all for?”). Its prominence in the discussion of equity comp increases the chances we’re going to make sub-optimal decisions. Ultimately, I think, it has the potential to make us all less content with our finances.

I am drafting this blog post on the airplane ride back from two weeks’ vacation on the east coast. I took my family to NYC for five days. There we got to have new experiences together, I got to see my kids get excited about things. I got to meet in-person some clients I’ve only ever seen on the screen. (As one of my daughters said, “Are all your clients this cool? No wonder you love your job.”)

Then we went to New Hampshire, where we spent over a week in a rented house on a lake, with my father and my brother’s family, including my kids’ only cousin. I get to see them all only once a year, and it’s very special to me.

Now, did I need money to have and enjoy this vacation? No doubt. Some money is definitely necessary.

If I were twice as rich, or if I paid less in taxes, could we have afforded a fancier rental house or rented a speed boat for more than one day?

Certainly.

Would it have given me more or better memories? Would it have strengthened my relationships with my family any better? Would it have helped me avoid getting Covid (which I did…womp womp)? Would it have increased my joy at looking over the cabin railing down at the beach, seeing my two daughters play Marco Polo with their cousin in the lake?

Probably not.

We’re all different. Different values. Different stages of life. Different histories with money and relationships. I don’t share my recent vacation awesomeness as a specific aspiration. I’m sure many of you have had more expensive, more elaborate, and even more enjoyable vacations.

But I do want to invite you to think (many times, with many people, sometimes in silence, over a long period of time) about what makes your life meaningful. What gives you purpose. What gives you joy.

That should be the guiding light of your IPO decisions.

If your goal is to minimize taxes, then sure, yes, you can:

  • Strategically exercise and sell your ISOs so that you never owe Alternative Minimum Tax (AMT)
  • Wait to exercise (and sell) your NSOs until you have used up most of the leverage in them (gotten most of the value out of the options)
  • Hold on to your shares for at least a year to ensure you pay the lower long-term capital gains tax rate when you sell them
  • Spread your options exercise and share sales over several years so you stay out of the highest tax bracket
  • Put your giant pile of company stock in an Exchange Fund to get diversification without immediately selling (and incurring taxes)
  • Donate a lot of company stock to a Donor Advised Fund

If your goal is to get as rich as possible, then sure, yes, you can keep most of your company stock. After all, concentrated ownership in an asset is one of the few ways to build startling wealth.

But what if the company stock price tanks? (That’s been known to happen a time or 1000 in the aftermath of an IPO.)

Or you need the money to do something or buy something now?

Your savvy tax- and wealth-optimization maneuvers can result in less money, for the simple reason that we just don’t know how this stock is going to perform. Now, if it’s “just money,” then maybe our attitude is “oh well.”

But if instead of “just money,” it’s your kid’s college, or your first home, your return to school to train for a new career, that trip you really want to take your family on, or that robust cash emergency fund you’ve always lacked and has always made you feel vaguely unsafe…well then, that’s actually kind of a tragedy.

Consider two people going through the same IPO: Chloe and Jane.

They each have $2M worth of company stock. Chloe does all the wealth-maximizing, tax-minimizing things. Chloe doesn’t have much sense of what she wants out of life. She just wants to have more money, be wealthier, be “financially independent,” to do what she wants when she wants.

Jane, on the other hand, has a pretty clear vision of what she wants out of life. She has thought about this before. She wants enough wealth that she can feel comfortable saying No the next time her job makes her feel uncomfortable or morally compromised. She wants to move back home, closer to family, and buy a home there. So, she sells most of her stock as soon as she can, not even paying much attention to the tax rate.

This can play out two ways:

Way #1: Let’s say the company stock goes on to do poorly. Well, then, generally it was a better bet to sell the stock ASAP, when it was worth more. Jane comes out on top: She has more money than Chloe and more ability to build her vision of a rich life.

That’s an easy one.

Way #2: But now let’s say that the stock instead goes on to do great! Chloe ends up with four times the wealth that Jane does!

You might think this makes Jane’s path the less fortunate one. I would argue Jane still probably comes out ahead. How is that possible?

Jane still has enough money to allow her to quit her job if it ceases being a good fit for her, and enough money to move back home and buy a house. She can still fund her vision of a rich life.

On the other hand, yes, Chloe has money. Lots of it. And money ain’t nothing to sneeze at. But that’s kind of all she has. There’s no higher purpose that this money is serving in her life. Maybe she can get a more expensive home. Go out to eat more. Take nicer vacations. But unless there’s a broader vision underlying those things, it’s just plain consumption.

Now, look, no financial planner worth their shiny CFP® lapel pin would tell you to ignore taxes and the strategies for building more wealth. We have to know these things so we can make an informed decision.

But I don’t actually think your IPO, even if it “goes well,” will meaningfully change your life if you don’t start with a vision (even a vague one) of the life you want to build for yourself, now and in the future.

Step #1 is to build that vision. At least the outlines of one.

Step #2 is to optimize for minimizing taxes and building wealth within that larger life plan, not as the plan itself.

I invite you to figure out how you’re going to define a “successful” IPO.

Is it defined by how much you pay to the IRS? Is it defined by how much money you get compared to your colleagues?

Or is it (and I hope you arrive here) defined by your ability to meaningfully support a life of meaning and joy? A life that better enables you to build and honor relationships? To serve others?

Do you want help making your company’s IPO a success?