As SpaceX, OpenAI, and other mega-cap private companies edge toward historic IPOs, the financial decisions facing their employees are among the most complex and consequential in modern wealth management. Concentrated, illiquid equity, compressed timelines, and the psychological pull of peer behavior all combine to create conditions where costly mistakes are easy to make and hard to reverse.
Tara Shulman, principal wealth advisor at Compound Planning, works directly with clients navigating these decisions. She told InvestmentNews that preparation must begin well before any liquidity event arrives. "Being IPO-ready starts with organization and clarity," she says. "Employees need a strong understanding of their current financial position, spending habits, tax exposure, and long-term goals before liquidity arrives."
Shulman emphasizes the importance of defining goals early. "Once those goals are clearly defined, we can work backward to determine the after-tax amount needed to support them. That framework becomes the foundation for thoughtful selling decisions," she explains. The psychological dimension matters just as much. "Selling concentrated stock can be emotionally difficult, especially when coworkers, social media, and headlines amplify fear of missing out," Shulman notes.
Her approach to concentration risk is deliberately staged rather than prescriptive. "We generally do not expect clients to fully liquidate their equity immediately after an IPO. Very few people actually do. Instead, we typically think about diversification in stages," she says. The first stage targets financial security and getting clients to a level of liquidity that puts retirement on track and protects against catastrophic downside. The second is more aspirational: identifying what would be needed to accomplish major life goals.
For clients who choose to hold a meaningful position after an IPO, Shulman takes a holistic balance-sheet view: "A concentrated equity position often becomes one component of a larger investment strategy rather than something that must be entirely eliminated. In those cases, diversification may happen around the position instead of directly through it."
The period immediately following an IPO is when many of the most damaging decisions get made. "The first 100 days after an IPO are often emotionally charged and highly volatile. Many of the biggest mistakes happen when employees make rushed decisions in response to either euphoria or fear," Shulman says. One technical trap she sees frequently: "A common mistake is immediately cashless exercising options simply to establish long-term capital gains treatment on remaining shares. In volatile post-IPO markets, that can unintentionally lock in a very high cost basis while simultaneously reducing exposure to future upside."
Tax planning is another area where clients consistently fall short. "Employees frequently focus only on the stock price and fail to fully evaluate withholding requirements, AMT exposure, estimated taxes, and the broader implications of their equity decisions across multiple tax years," she says. The behavioral dimension is equally significant. "I often see highly intelligent people make irreversible decisions during moments of panic or excitement. Once a trade is executed, the tax consequences are permanent."
With private companies staying private far longer than in previous decades, tender offers have taken on new significance. "Today, companies are staying private much longer, so tender offers have increasingly become the first meaningful liquidity event for employees," Shulman says. "Many employees instinctively want to wait for the IPO because they assume it will represent the company's peak valuation. But that assumption can be dangerous." Historical patterns challenge the instinct to wait. "When we look historically at large private companies, many employees are surprised to see that tender offer valuations often performed similarly to broader public market indices over time, but with substantially more concentration risk and illiquidity along the way."
Advisors should also be aware of recent developments in the private equity space. For instance, a Blackstone survey found that 90% of advisors are boosting or holding private equity allocations despite redemption turmoil. Meanwhile, Walton Land Funds are suing a repeat SEC target over alleged below-market mini-tender offers, highlighting the importance of due diligence in private placements.
Shulman's broader message to advisors is to resist the pull toward a single answer: "The goal is not to force clients into a single 'correct' answer, but to help them make informed decisions that align with their values, goals, and risk tolerance over time."
