Looking for some info/advice here...
I'm two years into a four-year vesting period at a pre-IPO company, and have ISOs (Incentive Stock Options). The company is doing extremely well and my gut tells me they'll file for an IPO in the next 6 to 12 months (that is ONLY a gut feeling, nothing more).
We have the ability to early exercise our options, but to date I have not bought any of my options (vested or not), because I wanted to be a little more sure things were going well, and the company would file for an IPO. However, now the difference between my strike price, and the common share price, is high enough that there will be significant AMT tax that I would owe on the spread - enough that it's going to wipe out my savings, if not cost me even more than that.
Because of that, the way I'd like to time it is...when the company actually announces they're filing for an IPO, I'd like to early exercise everything the next day. I would owe a lot of AMT the next year, but I'd be okay with that knowing the company was proceeding to an IPO, and I could sell just enough stock after the blackout period to help pay the AMT taxes. My goal is to hold on to all my shares (minus what I need to sell to pay AMT) for at least one year for capital gains treatment, probably longer, because I'd want to hold off and see if the company gets acquired after going public, which would push up its valuation even more.
My concern is that when the company announces an IPO, some kind of window shuts on us being able to early exercise. I'm waiting to get an "official" answer from the company on this, but thought I'd reach out to folks who might have been in this situation before to get their experiences.
When a company files for an IPO, I'm aware of quiet periods and things like that surrounding public statements, but are there rules in place that would prevent employees from early exercising their options right after the announcement?
Thanks!
I'm two years into a four-year vesting period at a pre-IPO company, and have ISOs (Incentive Stock Options). The company is doing extremely well and my gut tells me they'll file for an IPO in the next 6 to 12 months (that is ONLY a gut feeling, nothing more).
We have the ability to early exercise our options, but to date I have not bought any of my options (vested or not), because I wanted to be a little more sure things were going well, and the company would file for an IPO. However, now the difference between my strike price, and the common share price, is high enough that there will be significant AMT tax that I would owe on the spread - enough that it's going to wipe out my savings, if not cost me even more than that.
Because of that, the way I'd like to time it is...when the company actually announces they're filing for an IPO, I'd like to early exercise everything the next day. I would owe a lot of AMT the next year, but I'd be okay with that knowing the company was proceeding to an IPO, and I could sell just enough stock after the blackout period to help pay the AMT taxes. My goal is to hold on to all my shares (minus what I need to sell to pay AMT) for at least one year for capital gains treatment, probably longer, because I'd want to hold off and see if the company gets acquired after going public, which would push up its valuation even more.
My concern is that when the company announces an IPO, some kind of window shuts on us being able to early exercise. I'm waiting to get an "official" answer from the company on this, but thought I'd reach out to folks who might have been in this situation before to get their experiences.
When a company files for an IPO, I'm aware of quiet periods and things like that surrounding public statements, but are there rules in place that would prevent employees from early exercising their options right after the announcement?
Thanks!