When your company is preparing to go public, most of the focus is on the IPO itself.
What will the valuation be?
How will the stock trade?
What will your equity be worth?
Those are natural questions. But one of the most important moments often comes after the IPO, not during it.
Most employees cannot sell immediately. A lockup period, often around 180 days, delays that first real decision. During that time, you can watch the stock price move, but you cannot act on it.
When the lockup expires, that becomes the first true opportunity to turn equity into something tangible. It is also where the biggest decisions begin. How much to sell, how much to hold, and how to manage the tax and risk that come with both.
If your company is still in the process of going public, it helps to understand how your equity works and what changes during an IPO before thinking about what comes next. We covered that in more detail here: My Company Is Going Public. What Should I Do With My Stock?
Here’s a plan for lockup expiration after IPO that can make a huge difference when the time comes. Instead of reacting to the market, you can approach it with clarity and intention.
Why Lockup Expiration Is Such a Critical Moment
The lockup expiration is often the first time you are able to sell your shares. After months of watching the stock trade, you can finally act.
By this point, a few things may already be true. The stock price may have moved substantially since the IPO. Your net worth may look very different from what it did before. You may also have a clearer sense of how much of your financial life is tied to a single company.
This is what makes the moment important. It is not just about the ability to sell. It is about moving from paper wealth to real decisions.
For many people, this is the first time equity stops being theoretical and starts becoming part of an intentional financial plan.
What You Actually Need To Decide
When the lockup ends, these are the main questions that need to be answered.
- How much should you sell?
- When should you sell?
- How do taxes affect those decisions?
- How much exposure do you want to keep?
You do not need to solve everything at once. But it’s good to have a clear point of view on each of these questions before the lockup expires.
Start With Your Current Exposure
One of the most useful ways to approach this moment is to step back and look at your overall exposure.
If a large portion of your net worth is tied to company stock, that concentration carries real risk. This is especially true if your income, career trajectory, and future equity grants are also tied to the same company.
A helpful way to think about this decision is: if you were starting from cash today, would you choose to invest this much into this one stock?
For many people, the answer is no. That does not mean you need to sell everything. It simply means the decision should be intentional.
Reducing concentration over time is often less about timing the market and more about managing risk in a way that supports your broader financial goals.
The Tax Reality At Lockup Expiration
Taxes are often one of the most overlooked parts of this process, until they become unavoidable.
By the time your lockup expires, some taxable events may have already occurred. RSUs may have been taxed as they vested or settled. Option exercises may have created ordinary income in the case of NSOs, or triggered AMT in the case of ISOs
Selling shares introduces another layer of taxes. The rate you pay depends on how long you have held the shares, not just when the IPO occurs.
If you sell shares within a year of receiving or exercising them, any gain is typically taxed at short-term capital gains rates, which are the same as ordinary income rates. Holding shares longer may allow some of that gain to qualify for long-term capital gains treatment, which is often lower.
The key is understanding when your holding period starts, since that can vary depending on whether your equity came from RSUs, ISOs, or NSOs.
At the same time, tax considerations should not be the only factor driving your decisions. Holding a highly concentrated position purely for tax reasons can introduce its own risks, even if the tax savings look appealing on paper.
What matters most is understanding the tradeoffs in advance, rather than discovering them after the fact.
How Most Employees Approach Selling
In practice, most people do not make a single all-or-nothing decision.
Some choose to sell a portion of their shares soon after the lockup expires. This can help create liquidity, reduce concentration, and cover any anticipated tax obligations.
Others take a more gradual approach, selling over time to spread out risk and avoid reacting to short-term price movements.
Some hold a larger portion of their shares because they remain confident in the company’s long-term trajectory.
There is no single correct approach. What tends to matter more is whether the decision is made intentionally.
Without a plan, it is easy to default to whatever the stock is doing in the moment. That often leads to reactive decisions that are harder to unwind later.
Why Timing The Market Usually Backfires
Lockup expirations are often associated with increased volatility. As more shares become eligible for sale, trading volume tends to rise, and price movements can become less predictable.
It is natural to want to time your decisions around this. To wait for a better price. To avoid selling into a dip. To capture a short-term spike.
In reality, this is difficult to do consistently.
The more reliable approach is usually to separate your financial decisions from short-term market movements. That might mean selling according to a predefined plan, rather than trying to react in real time.
This is less about giving up on upside and more about reducing the chances of making decisions under pressure.
Turning A Liquidity Event Into A Long-Term Plan
A lockup expiration is not just about selling shares. It is about what those shares can enable.
For some, this is the first opportunity to create a financial cushion. For others, it may mean paying down debt, investing outside of company stock, or starting to think more intentionally about long-term goals.
This is where the transition happens. Equity moves from being tied to one company to becoming part of a broader financial strategy.
That shift does not have to happen all at once. But having a plan for how your equity fits into your overall financial life can help guide the decisions you make along the way.
Get A Plan In Place Before Your Lockup Ends
The most valuable work often happens before the lockup expiration date arrives.
This is the time to understand your current position, estimate potential tax outcomes, and decide how you want to approach selling. Even a simple plan can help. Knowing in advance what percentage you might sell, or under what conditions, can make it easier to act with clarity when the time comes.
If your company has recently gone public or your lockup expiration is approaching, taking the time to think through these decisions ahead of time can make the process feel far more manageable.
KB Financial Advisors works with tech employees and founders navigating stock options, RSUs, and major liquidity events like IPOs.
If you are looking for a second perspective on your equity strategy or want to better understand the tax implications of your decisions, we are always happy to help you think it through.
