Before the Exit: 5 Strategic Moves to Make Now

The phone call comes: Your company is in acquisition talks, or the IPO roadshow is starting. Suddenly, the equity compensation you’ve been accumulating for years is about to become real money.

For most startup founders and early employees, this is uncharted territory. The decisions you make in the months leading up to a liquidity event can have million-dollar implications.

So why do many people wait until the deal is announced to start planning? By then, some of your best options are already off the table.

Here are five strategic moves you should make now, while you still have maximum flexibility.

1. Model Your Equity Scenarios (Best, Worst, and Realistic)

You need to understand what your equity is worth under different exit scenarios. This isn’t about the latest 409A valuation—it’s about modeling realistic outcomes based on your company’s performance, comparable exits, and current market conditions.

Create three scenarios: optimistic, pessimistic, and most likely. For each, calculate your after-tax proceeds accounting for your strike prices, exercise costs, alternative minimum tax (AMT) implications, and potential capital gains treatment. Factor in dilution from additional funding rounds, liquidation preferences, and any acceleration clauses in your agreements.

This exercise does more than give you numbers—it helps you make rational decisions about exercising options, managing your personal cash flow, and setting realistic expectations. It also reveals whether you need to take action now to optimize your tax situation.

2. Consider Early Exercise (If You Haven’t Already)

If you hold unexercised incentive stock options (ISOs) or non-qualified stock options (NSOs), the timing of when you exercise can dramatically impact your tax bill. Early exercise—buying your shares while the fair market value is close to your strike price—can minimize or eliminate AMT exposure and start your long-term capital gains clock.

The trade-off is straightforward: You’re spending cash now on illiquid stock that may or may not pay off. But early exercise is often worth serious consideration if your company is showing strong momentum toward an exit, and the spread between your strike price and current FMV is still manageable.

If you exercised ISOs, make sure you’ve filed an 83(b) election within 30 days. Missing this deadline can’t be fixed and may cost you significantly in taxes later. Even if you exercised years ago, now is a good time to confirm that the filing is in your records.

3. Get Your Financial House in Order

A liquidity event will change your financial life overnight. The time to build the infrastructure to handle that wealth is now, not after the wire hits your account.

This means establishing relationships with the right professionals: a financial planner who specializes in liquidity events, a CPA experienced with complex equity compensation, and potentially an estate planning attorney if the exit will be substantial. These relationships take time to develop, and you want trusted advisors in place before you’re making time-sensitive decisions.

A liquidity event also means clearly understanding your current financial position. What are your living expenses? What debts do you have? What are your medium- and long-term financial goals? Having this baseline clarity will help you make better decisions about diversification, spending, and investing after the exit.

4. Plan for Concentrated Position Management

After your lockup period expires, you’ll face a critical question: How quickly should you diversify out of your company stock?

There’s no one-size-fits-all answer, but you should enter the process with a strategy rather than making emotional decisions during market volatility. Consider developing a systematic diversification plan—perhaps selling a certain percentage each quarter over 12 to 24 months—that balances tax efficiency with risk management.

If you’re subject to 10b5-1 trading restrictions, you may need to set up a predetermined trading plan. By understanding these requirements and developing your strategy now, you can execute quickly once you’re legally able to sell.

For very large positions, explore whether strategies like exchange funds, charitable remainder trusts, or direct indexing might help you diversify more tax-efficiently.

5. Think Beyond the Transaction

Financial planning isn’t just about tax optimization—it’s about designing the life you want to live with this newfound wealth and freedom.

Before the exit happens, spend time reflecting on what’s important to you. Do you want to take time off? Start another company? Focus on philanthropy? Support family members? Buy a home? These aren’t questions to answer in the chaotic weeks after an acquisition closes.

Having clarity on your values and goals will guide every financial decision that follows. It’s the difference between letting the money control your life and using it as a tool to create the life you want.

The Bottom Line

Liquidity events are life-changing moments, but they’re also complex financial transactions with lasting implications. The founders and early employees who fare best aren’t necessarily those who get the biggest exits—they’re the ones who plan strategically, act proactively, and make informed decisions aligned with their long-term goals.

The best time to prepare for your exit was yesterday. The second-best time is today.

The opinion of the author is subject to change without notice and must be considered in conjunction with relevant regulation, as well as subsequent changes in the marketplace. Any information from outside resources has been deemed to be reliable but has not necessarily been verified. Each individual has unique circumstances to which this information may or may not be relevant. Under no circumstances will this information constitute an offer to buy or sell and it does not indicate strategy suitability for any particular investor.