Liquidity events—IPOs, acquisitions, tender offers—can be inflection points in a tech executive’s wealth journey. But without the right planning, they can also trigger avoidable taxes, portfolio imbalances, and missed opportunities.
For tech executives with concentrated equity and complex compensation structures, thoughtful liquidity planning is essential to help position one-time events as potential catalysts for long-term, multigenerational wealth.
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Liquidity planning is about figuring out how to turn equity into usable cash—without triggering unwanted or surprise tax bills or creating new problems down the road. Whether you're working with RSUs, ISOs, or private shares, it's a way to look ahead and project how your decisions today can shape your financial picture tomorrow.
For example, let’s say you’re coming up on a lockup expiration post-IPO. Do you sell immediately? Wait? Hedge? Liquidity planning is the process of modeling those choices—looking at how different scenarios impact your AMT exposure, long-term capital gains, and portfolio balance.
It’s not just about getting money out. It’s about making sure that money is working for you in the ways you envision:
In our meetings, we’re looking at things like:
Want to see how we guide tech executives with liquidity planning? Here are some common scenarios we tackle:
|
Scenario |
Planning Questions |
What We Model |
|
Post-IPO Lockup Expiration |
Should I sell now or wait? What are the tax implications? |
Optimal timing for sales, 10b5-1 plan design, capital gains vs. ordinary income |
|
Private Company Tender Offer |
How much should I sell? What’s the long-term impact? |
Cash needs vs. equity upside, diversification trade-offs, multi-year tax exposure |
|
ISO Exercise & Hold |
Am I triggering AMT? Should I sell now or later? |
AMT projection, break-even analysis, timeline for tax-efficient liquidity |
|
Major Life Goal (buying a house, investing in a startup, taking time off) |
How do I fund this without derailing long-term plans? |
Amount to liquidate, tax timing, portfolio adjustments |
|
Concentrated Stock Position |
Am I overexposed to my company? What’s the risk? |
Diversification strategy, downside protection, risk-adjusted allocation |
Liquidity planning takes what could be a one-time windfall—and turns it into a launchpad for bigger, longer-term goals.
A liquidity event is any situation where your previously illiquid equity—like RSUs, ISOs, or early-stage shares—can be converted into cash.
For tech executives, these events often come with celebration... and stress. Suddenly, you’re facing big decisions about timing, taxes, and long-term strategy—often with a very short window to act.
Here are a few common liquidity events we see in client planning:
|
Liquidity Event |
What It Looks Like in Real Life |
|
IPO |
Your company goes public and your RSUs or early equity grants become sellable after the lockup period. You now need a plan to sell, diversify, and manage taxes. |
|
M&A |
Your company gets acquired, and you receive cash or stock in the acquiring company. This triggers income or capital gains and requires a fresh look at your allocation. |
|
Tender Offer / Secondary Sale |
You’re invited to sell shares in a secondary round. It feels like free cash—but should you sell, and how much? What does it mean for your future upside? |
|
Private Stock Buyback |
The company offers to buy back your shares. You’ll need to weigh the short-term liquidity against long-term growth potential and model the tax impact. |
|
Venture Distribution |
A VC fund you're invested in returns capital to you following a company exit. Often unexpected and taxable—so it needs to be folded into your broader strategy. |
These moments often feel urgent—and sometimes rare—but they’re actually opportunities to realign your wealth with your goals. The key is not to treat them like windfalls. Instead, we help clients treat them like levers. When used wisely, they may be able to help fund lifestyle upgrades, reduce risk, and open the door to longer-term financial independence.
If you're sitting on a significant equity position, a liquidity event isn’t just a payday—it’s a financial inflection point.
Handled well, it can help build a foundation to create multigenerational wealth. Handled poorly, it can trigger a tax bill you didn’t expect, leave you overexposed to a single stock, or create missed opportunities you don’t get back.
This is something we can see with clients who come to us post-IPO or after a tender offer. The equity they've worked hard to earn is finally worth something—but the decisions around it are high-stakes and often time-sensitive.
Here’s what’s at risk without a clear strategy:
|
Risk |
What It Looks Like |
|
Overpaying in Taxes |
Selling all at once and stacking income in a single year—triggering AMT, NIIT, and higher federal brackets. A multi-year plan could reduce your effective rate. |
|
Overconcentration |
Holding too much of your net worth in company stock—even after liquidity. Great if the stock soars, risky if it doesn’t. Diversification creates long-term resilience. |
|
Missed Planning Windows |
Forgetting to leverage donor-advised funds, gifting strategies, or QSBS benefits during the liquidity window. These are opportunities you can’t go back and capture. |
Liquidity planning gives you time to think before you’re forced to act. It lets you model scenarios, stress-test outcomes, and choose the moves that support your life—not just your balance sheet.
Think of it this way: you're not just cashing out—you’re building what comes next.
Liquidity events require more than just a sell decision—they demand a strategy that considers timing, taxes, risk, and long-term goals. Here’s how we guide tech executives through the most critical levers of liquidity planning.
Your ability to act on a liquidity event often comes with restrictions—some predictable, others not. That’s why we help clients plan ahead, so timing constraints don’t turn into missed opportunities.
High-earning tech professionals face a uniquely complex tax landscape. The right moves—especially before a sale—may offer meaningful tax advantages.
Liquidity events are a chance to rethink your entire financial ecosystem—not just access cash.
Liquidity events are one of the best opportunities to align your wealth with your values—especially when planning starts early.
Liquidity planning isn’t hypothetical. These are real, high-stakes situations our clients are navigating right now—and the kind of scenarios that demand a coordinated, proactive strategy.
|
Trigger |
What It Looks Like |
Planning Focus |
|
Pre-IPO Liquidity (e.g., Stripe, OpenAI, Duolingo) |
Executives exploring secondary or tender offers before a formal IPO. Often a narrow window with strict requirements. |
Looking at how to sell a portion without overloading your tax bill, and making sure things like QSBS are still in play if you qualify. |
|
Founder Exit or Earnout |
A mix of cash and stock over time—often tied to performance or time-based milestones. |
Cash flow modeling, portfolio strategy, estate and gifting prep before full payout |
|
Longtime Employees With Large RSU Positions |
Accumulated RSUs from years at a high-growth company, with limited diversification. |
Sell-down strategy, 10b5-1 plans, post-liquidity investment structure |
|
Private Company Buyback |
The company offers to repurchase shares at a set valuation—often with a decision deadline. |
Opportunity cost evaluation, tax timing, reinvestment or charitable planning |
Whether you’re six months out from a liquidity event or already in motion, here’s how we guide clients through the process. Each step helps you move from reactive to strategic—with clarity on what to do, when to do it, and who should be involved.
When the moment hits, you don’t want to be scrambling. You want to be ready—with a strategy that reflects your values, goals, and the life you’re building.
Liquidity is not just about cashing out—it’s about thoughtfully converting equity into possible lifelong financial freedom. A big liquidity event can feel like the finish line—but it’s really just the start of what’s next. With a little planning, it has the potential to give you more freedom, more flexibility, and a strategy that actually fits the life you’re building.
Let’s Talk:
Thinking through a liquidity event? Now may be the perfect time to schedule a call with a Schmidt advisor to explore how you want to use your equity compensation. Let’s discuss what’s on the horizon and map out thoughtful strategies that align with where you’re headed.
Acting without a plan. Whether it’s selling everything at once, missing a QSBS window, or donating after a big tax hit, the cost of poor timing can be significant. The biggest wins often come from what you do before the event—not after.
QSBS eligibility depends on when the shares were acquired, the type of company, and how long you’ve held them. We review your equity details and ownership timeline to help you qualify—and, if you’re close to the five-year mark, we often plan around it.
Yes—with a well-structured 10b5-1 plan. It lets you sell shares on a pre-set schedule, even during blackout windows, without triggering insider trading concerns. We build these with flexibility so you can reduce risk without making headlines.
Donating appreciated stock to a Donor-Advised Fund before the sale is one of the most efficient ways to give. You avoid capital gains, get a full deduction, and keep control over the timing and direction of your donations.
It depends on your timeline and your AMT exposure. Sometimes early exercise makes sense, especially if the spread is small. Other times, we advise waiting and managing the sale more strategically. We model both to give you clarity.
You may miss tax planning windows, lose QSBS eligibility, or stay over-concentrated longer than is comfortable. Waiting is a decision—and often a risky one. We work with clients to map out what “holding” actually means across different outcomes.
Schmidt delivers a proprietary, hands-on client experience through our custom tax dashboard, keeping clients, CPAs, and advisors aligned on estimates, projections, and planning opportunities. We also leverage highly personalized estate strategies to help clients achieve both their short- and long-term financial goals.
Now. The earlier we begin, the more options we have—especially for tax strategy, estate planning, and charitable moves. We treat it like a runway, not a deadline.