IPO vs. Acquisition: Why Your Wealth Strategy Needs to Change Either Way

As a die-hard, suffering Minnesota Vikings fan, I’ve had this feeling more times than I’d like to admit. You’re watching the game, you can see what’s about to happen, and you desperately want someone to do something about it. The problem is you’re sitting on your couch. You have zero control.

Believe it or not, going through an initial public offering (IPO) can create a similar feeling. Your company finally goes public after years of holding illiquid equity. Suddenly, your shares have a price attached to them, and you can pull up your phone and watch your net worth change by the minute. There’s just one problem. You may not be allowed to sell.

An acquisition creates a different experience. Think about when your favorite team makes a blockbuster trade for a superstar. Before the player even puts on the jersey, fans are already picturing the championship. An acquisition announcement can create some of that same excitement. You see the headline saying your company was acquired for $1 billion, $5 billion, or more, and naturally your mind starts doing the math.

Both events can create life-changing wealth. They just require very different financial and emotional game plans.

IPO

One of the biggest challenges with an initial public offering is the lack of control. When your company goes public, you may have restrictions on when you can sell your stock. Many IPOs come with lockup periods during which company insiders are restricted from selling their shares for a set period, typically 90 or 180 days.

This is where I go back to being a Vikings fan. Watching a close game when you have absolutely no control over the outcome can be stressful. An IPO can create a similar feeling. Your stock might go up. It might go down. Either way, you’re watching your net worth move in real time while knowing you may not be able to do anything about it.

Before the IPO, you spend years wondering whether your equity will ever become liquid. Then the company finally goes public. The uncertainty doesn’t disappear. It changes. Your shares now have a public price that you can watch move every single day, but you might not be able to do anything about it.

Figma is a great example of how dramatic this can feel. The company went public in July 2025, finally putting a public value on the equity that employees had spent years accumulating. Figma’s stock traded around $142 per share in August before falling to around $35 by December. Imagine watching that happen when the stock represents a meaningful percentage of your net worth.

That’s when the questions start. Do you sell when you’re able to? Do you wait for the stock to recover? How much should you diversify? What if you sell and the stock doubles? What if you hold and it gets cut in half again? These aren’t easy questions when the shares represent years of your work and potentially a significant portion of your financial future.

The Figma example is dramatic, but that’s exactly why having a game plan before an IPO matters. You don’t want the stock price deciding your strategy for you. Before you are able to sell, you should already have an idea of how much company stock you are comfortable owning, what the tax impact of selling could look like, how much liquidity you need for other goals, and how quickly you would like to diversify.

A strategy going into an IPO is important financially, but I think it is just as important emotionally. Watching your net worth fluctuate is very different when you know you can sell. Watching it happen when your hands are tied can make even a good plan difficult to follow.

Acquisition

An acquisition creates a different problem. Instead of watching a public stock price move while waiting for your opportunity to sell, you first need to understand what the deal actually means for your equity.

IG Group’s agreement to acquire Underdog is a good example. As a sports fan, I find this one especially interesting. Underdog was founded in 2020 and quickly became a major player across fantasy sports and prediction markets. A few years later, there is now a deal worth up to approximately $1.3 billion.

That sounds like the number that matters. Once you dig into the transaction, though, the picture changes. The deal includes upfront consideration based on an enterprise value of approximately $1.1 billion, plus an earnout of up to $200 million tied to future performance. After accounting for debt, other liabilities, and cash, the expected upfront equity value is approximately $963 million.

Suddenly, a “$1.3 billion acquisition” doesn’t tell an employee very much about what their equity is actually worth.

Underdog is one example, but acquisitions can take many forms. You might receive cash, stock in the acquiring company, or a combination of both. Part of your payout might also depend on an earnout, continued vesting, or future performance. The company has reached an exit, but that doesn’t necessarily mean all of your wealth is immediately available.

This is where the questions change. What are you actually receiving? When will you receive it? How much is guaranteed versus dependent on future performance? What will you own once the transaction is complete?

Cash creates decisions around taxes, investing, and what the proceeds can now do for your life. Stock raises a different question because your wealth may still be concentrated in a single company.

I like to think of it as your equity changing jerseys.

If you received the same amount in cash, would you use all of it to buy shares of the acquiring company? Maybe you would. Maybe you wouldn’t. Either way, continuing to hold the stock is still an investment decision.

Future payments need to be viewed differently too. An earnout could eventually become very valuable, but it isn’t the same as cash you have today. That distinction matters when you’re thinking about buying a home, leaving your job, taking another career risk, or determining whether you’ve reached financial independence.

That’s what makes acquisition planning different. The headline tells you what happened to the company. Your financial plan needs to focus on what actually happened to your wealth.

Different Exit, Different Game Plan

An IPO and an acquisition can both turn years of illiquid equity into life-changing wealth. They just create different decisions along the way.

With an IPO, your shares suddenly have a public price, but you may not have complete control over when you can sell. You need to think about concentration risk, taxes, liquidity needs, and how much of your company stock you actually want to continue owning once you have the ability to diversify.

With an acquisition, the outcome may feel more defined, but the headline price is only the beginning. You need to understand what you’re actually receiving, when you’ll receive it, what is guaranteed, and what your financial picture looks like once the transaction is complete.

For years, the question was: What could my equity eventually be worth?

After a liquidity event, the question becomes: What do I want this wealth to do for my life?

Maybe that means creating financial independence. Maybe it means buying a home, taking another career risk, supporting your family, giving more, or simply reducing how much of your financial future depends on one company.

The exit determines how your equity becomes real. Your planning determines what happens next.