Your company just filed its S-1. The Slack channels are buzzing, everyone's doing back-of-napkin math on what their shares might be worth, and it feels like the finish line.

Here's the truth I learned going through Square's IPO as an employee: the months before the stock starts trading are when the real decisions get made. Once you're public, a lot of doors close — the lockup hits, the tax year is set, and your options narrow. The window between the S-1 and the IPO is the one that quietly determines how much of this windfall you actually keep.

So before you start picking out the new car, here's what actually deserves your attention.

1. Understand the lockup — it changes everything

Almost every IPO comes with a lockup period, typically around 90–180 days, during which employees can't sell. That means even after the stock "goes public," you're holding — exposed to whatever the price does — for months before you can act.

This matters more than people expect. The stock can be euphoric on day one and very different by the time your lockup lifts. Planning has to assume you're a holder through that window, not a seller. The question isn't "what's it worth at IPO" — it's "what's my plan when the lockup expires, at a price I can't predict."

2. Map your equity — what do you actually have?

This sounds basic, and almost nobody does it cleanly before the chaos hits. Before the IPO, get crystal clear on: how many ISOs vs. NSOs vs. RSUs you hold, your strike prices, your vesting schedule, and which options are vested but unexercised. Each type taxes differently and each decision has a different deadline. You cannot make good calls on a pile of equity you haven't fully inventoried.

3. Consider exercising options early — and weigh the tax

This is the highest-leverage, most time-sensitive decision, and it's why the pre-IPO window matters. Exercising options while the company is still private (or before the price runs up) can start the clock on long-term capital gains treatment and, for ISOs, can be done when the bargain element — and therefore the AMT exposure — is smaller.

But exercising early means paying the strike price out of pocket and potentially a tax bill, on a stock that isn't liquid yet. That's real risk: I've watched people exercise into a price that later fell hard. There's no free answer here — it's a genuine trade-off between tax savings and risk, and it depends on your conviction, your cash, and your overall picture. This is the single best reason to talk to someone before, not after.

4. Get your cash and tax reserves ready

An IPO can generate a large, lumpy tax bill — from exercises, from RSUs vesting on a liquidity trigger, from eventual sales. The people who get hurt are the ones who spend the paper gain and then can't cover the tax. Before the event, know roughly what you'll owe and where the cash comes from. A windfall you owe to the IRS was never really yours.

5. Decide your diversification plan in advance

This is the one I feel most strongly about, because I've lived the cost of getting it wrong on the household side. When the lockup lifts, you'll be holding a concentrated position in a single, newly-volatile stock — and you'll be emotionally attached to it. That's the worst possible moment to make a clear-headed decision.

So make it now, in advance, while you can think straight. Decide the rules before the emotion: how much you'll sell, on what schedule, and at what point you take risk off the table regardless of where the price goes. A pre-committed plan — even a simple selling schedule — beats trying to time a stock you love. The single question that would have saved my family a fortune: what happens if this goes to zero? Ask it before the IPO, not after.

The pre-IPO mindset

An IPO is a tool, not a trophy. The goal isn't to maximize the headline number on paper — it's to convert this once-in-a-career event into durable, diversified wealth that buys you options: the move, the time, the work-optional life. That conversion is mostly decided in the quiet months between the S-1 and the first trade. Use them.

Key takeaways

• The lockup (≈90–180 days) means you're a holder well past the IPO — plan for the price you can't control.
• Inventory your equity (ISO/NSO/RSU, strikes, vesting) before the rush.
• Weigh exercising early to manage capital-gains timing and AMT — against the real risk of an illiquid stock.
• Pre-fund your tax reserve — a windfall owed to the IRS was never yours.
• Decide your diversification/selling plan in advance, before emotion and the lockup hit. Ask: what if it goes to zero?

The move: Your company filed and the clock is running? Book a Clarity Call — pre-IPO is exactly when a plan pays for itself.

Educational only — not personalized financial or tax advice. Equity and tax decisions are highly individual; work yours with a qualified CPA and advisor.