Preparing for IPO-Generated Wealth: Your Questions Answered

A successful IPO often results in a tidal wave of wealth. Are you prepared to make the most of it?

The U.S. Initial Public Offerings (IPOs) market set new records with IPOs up more than 650% compared to a year ago, according to FactSet. With private company valuations and the market both reaching new heights, this momentum is expected to continue through the end of the year and likely beyond.

For founders, employees and early investors, preparing for the IPO itself can be exciting, yet all-consuming. As your company gets ready to cross the elusive milestone of going public, many questions may arise as you prepare for a personal influx of wealth. Some of the questions we commonly get from clients include:

• How much will I owe in taxes?
• What rules and restrictions will I be subject to?
• What should I consider for short- and long-term wealth planning?
• Are there different estate planning strategies I should consider?

A post-IPO concentrated stock position is likely to represent a significant portion of your net worth and may require a different approach than your current wealth plan. Aside from an increase in wealth, when your private company ownership interests, founder’s stock or options convert into common shares, you will face a new set of complex regulatory restrictions. Having a clear view of how this influx of wealth affects your long-term goals is critical to your future financial success. Ideally, this can be accomplished with careful planning to address regulatory restrictions and corresponding tax implications.

How Northern Trust Can Help

IPO-generated wealth and equity-linked compensation demand technical expertise and effective, targeted financial planning. Our Executive Advisory Services experts understand the issues and complexities you will likely face, and are dedicated to helping you achieve your financial, tax, estate and philanthropic objectives.