When your company goes public, employee stock transforms from a promise into tradeable shares. This shift creates both opportunity and complexity.

Start by gathering specifics. Locate your equity agreement, vesting schedule, and the IPO prospectus. Know how many shares you own outright and how many remain unvested. Understand any lockup periods that restrict selling immediately after the IPO. Most executives face 180-day lockup windows that prevent cashing out early.

Learn the trading rules specific to your employer. Many companies impose blackout periods when insiders cannot buy or sell stock. Check your employee stock purchase plan terms and any restricted stock unit conditions. Some firms require pre-approval before employees sell.

Tax planning matters immediately. Restricted stock units trigger ordinary income tax when they vest. Stock options may qualify as incentive stock options, which receive favorable long-term capital gains treatment if held properly, or non-qualified options, which generate ordinary income at exercise. Consult a tax professional before acting. Selling shares generates capital gains taxes. Short-term gains (holdings under one year) face ordinary income rates. Long-term gains receive lower rates.

Diversification is critical. Holding concentrated positions in your employer stock creates risk. If the company struggles, you lose both your job and your wealth simultaneously. Many financial advisors recommend limiting company stock to 10-15 percent of your total portfolio.

Create a deliberate selling plan rather than reacting emotionally to price swings. Some employees sell a portion immediately after lockup expires to lock in gains and reduce concentration risk. Others hold longer-term positions to capture continued growth. Your timeline and financial needs should drive this decision.

Consider your overall financial picture. If you have substantial retirement savings elsewhere, you can afford to hold company stock longer. If this equity represents most of your net worth, prioritize diversification.

The IPO creates a taxable event window