Wealthfront’s Guide to Equity & IPOs
As companies like Airbnb, Lyft, Pinterest, Slack, Uber, and others gear up for multi-billion-dollar IPOs this year, we know that employees are often left with more questions than answers about their equity compensation. We collected our most popular advice on valuing equity, exercising options, selling stock, and managing a windfall into a comprehensive Guide to Equity & IPOs.
Second only to providing the most innovative saving and investment products, our priority at Wealthfront is arming our clients with the best financial advice on the issues that matter most to them. As a company based in Silicon Valley, equity compensation has been one of our most popular advice topics over the years — especially because there are few factors that more greatly influence your current lifestyle and financial future than owning equity in a successful company. With this in mind, we’ve published dozens of articles helping people navigate the major financial decisions related to company stock.
As companies like Airbnb, Lyft, Pinterest, Slack, Uber, and others gear up for multi-billion-dollar IPOs this year, we know that employees are often left with more questions than answers: What’s the best way to project how much you stand to benefit from your equity? When’s the right time to exercise options? How should you handle the emotional roller coaster of selling your stock? How can you make your money work for you once you receive a windfall?
To help you get the most out of your equity compensation, we collected our most popular advice into a comprehensive Guide to Equity & IPOs, which covers:
- How to value your equity (and why company valuation is the most important factor)
- Why you should only exercise early if your company is less than one year old, or when your company begins the process to go public
- The different tax implications of having incentive stock options, non-qualified stock options, or RSUs — and why you need a great tax accountant
- How to choose the right stock selling strategy (and strategies we don’t recommend)
- The best plan for allocating the money from your windfall after you’ve sold your stock
IPOs are an incredibly exhilarating time for a company and its employees — you might soon find yourself with more money than you’ve ever managed. Before the champagne pops, read our new guide and make sure you’re setting yourself up for the best financial outcome.
This blog is powered by Wealthfront Software LLC (“Wealthfront”) and has been prepared solely for informational purposes only. Nothing in this material should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any securities or financial product. Wealthfront offers Path, a software-based financial advice engine that delivers automated financial planning tools to help users achieve better outcomes. All information provided by Wealthfront’s financial planning tool is for illustrative purposes only and you should not rely on such information as the primary basis of your investment, financial, or tax planning decisions. No representations, warranties or guarantees are made as to the accuracy of any estimates or calculations provided by the financial tool.
Wealthfront is a wholly owned subsidiary of Wealthfront Corporation, and an affiliate of Wealthfront Advisers LLC, a SEC-registered investment adviser.
© 2019 Wealthfront Corporation. All rights reserved.
About the author(s)
Andy Rachleff is Wealthfront's co-founder and Chief Executive Officer. He serves as a member of the board of trustees and chairman of the endowment investment committee for University of Pennsylvania and as a member of the faculty at Stanford Graduate School of Business, where he teaches courses on technology entrepreneurship. Prior to Wealthfront, Andy co-founded and was general partner of Benchmark Capital, where he was responsible for investing in a number of successful companies including Equinix, Juniper Networks, and Opsware. He also spent ten years as a general partner with Merrill, Pickard, Anderson & Eyre (MPAE). Andy earned his BS from University of Pennsylvania and his MBA from Stanford Graduate School of Business. View all posts by Andy Rachleff