The path to liquidity for private company employees has gotten more complicated.
IPOs are no longer the only meaningful planning moment. Companies are staying private longer and tender offers — company-sponsored programs that allow employees to sell shares back — have filled some of that gap. According to Nasdaq Private Market, in 2025, tender offer volume reached roughly $35 billion, approaching the $45 billion IPO market. The recent blockbuster IPOs have created some optimism for future listings, but the reality is that liquidity events remain unpredictable.
For a lot of these employees, that creates a sense that there’s time to figure it out. But just the cost to exercise can increase alongside valuations, creating a real cost to waiting.
The biggest mistake is treating equity compensation as a one-time transaction. Should I sell? Should I exercise? Those are important questions, but any single equity decision can shape future equity, financial or even career decisions most people don’t see until after the fact. The tendency for those with equity is to optimize for one thing, when the real planning value comes from seeing the full picture early enough to act on it.
The advisors who serve these clients well aren’t reacting to liquidity events at the moment. They’ve already mapped out the equity picture. They understand the tax exposure and know their client’s goals before the liquidity moment arrives.
Employer Equity Isn’t Just An Investment Problem
The instinct to start the equity compensation conversation with concentration risk is right, but it’s only part of what these clients actually need.
A decision to exercise options (purchasing their vested shares), sell shares in a tender offer or sell shares once the company goes public can change someone’s tax exposure, their career flexibility and how they think about wealth transfer and charitable giving. An advisor who only addresses the portfolio piece is solving for one variable while the others move on their own.
An advisor who only addresses the portfolio piece is solving for one variable while the others move on their own.
Rather than optimizing for a single transaction, it’s about building a framework that connects the equity to the rest of someone’s financial life, so when something does happen, you and your client are prepared.
Tax Planning Has To Come Before The Transaction
Tax planning is one of the clearest examples of why the full picture matters.
Imagine someone sells in a tender offer and the custodian withholds at the statutory 22% federal rate. But gains from equity sales are often taxed as ordinary income, and at their income level, their liability is 37%. They may not realize the gap until they’re filing their taxes, and may not have the cash to cover it.
A similar surprise can happen on the exercise side. When a client exercises ISOs (incentive stock options), the company doesn’t withhold any taxes on the transaction. But the spread between the strike price (cost to exercise) and the 409A (the current value of a share) can trigger alternative minimum tax (AMT), a parallel tax system that catches many people off guard.
But AMT is also only triggered above a threshold that can vary based on the client’s overall income that year. With the right planning, there might be an opportunity to exercise meaningfully without paying any AMT.
Exercising and selling can be multi-year strategies, and the right decisions can be different for each client. That’s why you want to be working through all of this starting years before anything is on the horizon.
Equity, Career And Finances Are Connected But Not The Same Decision
For these clients, financial moments and career moments also have a way of arriving at the same time, and they’re often hard to separate.
For these clients, financial moments and career moments also have a way of arriving at the same time.
A tender offer surfaces, or a client is sitting on concentrated shares, but underneath they’re asking themselves if they should wait for the share price to go up. Or they feel like it’s a reflection on their conviction in the company if they sell.
Similarly, starting a new job looks like a career decision but it’s also a question about what it actually costs to leave. They may have unvested equity they’ll lose or vested ISOs they only have 90 days to exercise once they leave, and the new company’s offer may not cover that equity gap.
Clients can’t always see the distinction between career, financial or equity decisions when they’re in the middle of it. The advisor’s job is to help them evaluate each dimension separately and how they interact.
Concentration Is Emotional, Not Just Technical
The emotional dimension often gets underweighted. Clients may frame their reluctance to diversify or exercise options as a risk tolerance question. But the opposite can happen too. Excitement about potential upside could lead them to exercise more than they can actually afford once you factor in the purchase cost and taxes.
Excitement about potential upside could lead them to exercise more than they can actually afford.
In both cases, the better question is about their risk ability. How much of their financial picture depends on this company working out, and what can they afford to do about it? That gap between how a client feels about risk and what they can actually absorb is where costly decisions can happen.
The golden handcuffs dynamic illustrates this. It used to mean that the upside is genuinely too good to walk away from. Now it can mean the opposite; that leaving feels too costly. Someone making decisions from that place needs a very different conversation than someone who’s genuinely excited about where the company is going. An advisor who treats both the same way is missing what the client actually needs.
The Plan Has To Come Before The Moment
There's no universal playbook here. Every client’s situation is different; every liquidity event has its own mechanics and the equity decisions that matter most rarely arrive on a predictable schedule. But there can be a plan built before that urgency arrives. The clients who are best positioned when something happens are the ones whose advisor already had the work done. And right now, with more employees sitting on meaningful equity than at any point in recent memory, that’s an opportunity worth being ready for.
Jonny Jonson is a Senior Vice President and Wealth Advisor at Compound Planning who specializes in serving high net worth families, tech employees, executives and professionals.
