Upcoming IPO? Take These 3 Financial Planning Steps Now

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This post was originally published on Beyond Your Hammock

An upcoming IPO at your company presents you with a huge opportunity to make a massive leap of forward progress in growing your wealth.

With the potential for hundreds of thousands of dollars — or even millions of dollars — on the table for you, it’s not an exaggeration to say this is a high-pressure situation.

You must make the right financial decisions, or you risk losing the chance to capitalize on this opportunity. And you should think about this proactively, even if your upcoming IPO is still on the horizon and you’re not exactly sure when it will hit.

That means taking the following financial planning actions now, so you can stay ahead of the game and feel confident in your strategy for making the most of an upcoming IPO at your company.

1. Acknowledge Your Finances Are About to Get a Lot More Complicated

Going through an IPO with your company may mean putting yourself in a situation where you’re dealing with more money than you’ve ever had before.

And more money really can mean more problems if you’re not prepared.

Transferring money around each month when your paycheck hits is a lot different from suddenly seeing a million dollars in cash with your name on it. Managing an investment portfolio of $1,000,000 requires a different strategy than trying to grow a portfolio of $100,000.

It’s not just another comma and some extra zeros on the end of your net worth. It’s a whole other realm of complexity because you just opened up a whole other world of choices and decisions to make.

It gets overwhelming (and fast) because, very suddenly, the consequences of making mistakes get big.

Acknowledging the fact that your financial situation is going to be more complicated is a good first step to take. Acknowledge that this is an incredible opportunity — but that you need to take it seriously.

It might sound like a small thing, but so much of money is about how we think about money. And going through an IPO is going to require a few mindset shifts along the way in order to successfully manage this sudden influx of significant wealth.

It’s also going to require that you manage your emotions, which is what this first step of acknowledgement is setting you up to do next.

2. Feel All the Things! …Then Pause, Breathe, and Collect Yourself

I wasn’t kidding about the whole mindset thing — it really is a big part of making wise choices.

Most of the time when we make mistakes or do things we later regret with money, it’s because we reacted emotionally. We feel something and we react to that feeling.

But what you need to do is respond to things that happen to you instead of just rashly reacting.

I get that an upcoming IPO is hugely exciting and it’s only natural that your mind starts dreaming up all the things you can do once you get what is truly a life-changing amount of money.

It can also trigger a ton of other emotions:

  • Relief: you can move from financially struggling to financially secure.
  • Joy: you can provide not just for yourself but for others in your life or causes that you care about, too.
  • Stress: you could now have million(s) of dollars to your name. Literally MILLIONS. No pressure!
  • Fear: you know this is a lot of money — but you also know you have the rest of your life ahead of you. What if it’s still not enough?
  • Doubt: you know there’s huge opportunity here. But you don’t know how to turn a bunch of cash into real financial security and freedom. What next?

I don’t recommend squashing these feelings (or any others that might have come up for you). Feel them. Really lean into them and acknowledge them.

Just don’t act on them.

Give yourself some time and space to be emotional before you need to make any decisions. Get it out of your system… and then take a step back. Take some deep breaths. Consider how you will calmly, rationally move forward from here.

3. Make Your Action Plan to Implement After the Upcoming IPO

Alright, now that we’re through all the fluffy, feely stuff, we can get down to business with some serious, logical, practical financial planning.

You have a few ways to approach this upcoming financial event in your life.

The first? You can plan to put together your own financial strategy for how to best leverage the money you’ll receive post-IPO.

You’ll need to understand a number of factors, including:

  • What, exactly, you plan to expect from an IPO (in other words, what kind of shares, options or grants will you have access to?)
  • The tax implications of receiving equity compensation from an IPO event, and how to plan to pay the tax bill this will trigger
  • How to plan to manage your equity comp (exercise, sell, hold, etc)
  • What your current goals are
  • What your financial priorities and needs are (do you have any hair-on-fire emergencies to address? Any pressing issues that must be dealt with before you can move forward? Do you know the order in which you’ll address your goals?)

The second strategy might be a little easier, and that is to work with a professional who can help by working together with you to manage all the moving parts and answer the questions you might not know the answers to.

If you do choose to work with a professional to make the most of the financial opportunities an upcoming IPO at your company can offer you, then your set of considerations looks a little different than the list above.

You can allow the financial planner you choose to work with deal with those bullet points — but now your responsibility is choosing the right advisor in the first place, and that presents its own kind of minefield.

To help you navigate it, check out these resources that explain exactly what you need to know and look for when working with a financial advisor to help you make optimal decisions with your money to maximize your potential to grow wealth:

You might also enjoy these podcast episodes and blog posts (especially if you want to try the DIY approach) that will help you make good choices on your own without letting your emotions take over:

Have more questions about what to do when you expect an upcoming IPO at your company?

Feel free to schedule a free 30-minute Exploratory Session with Beyond Your Hammock to learn how a customized strategy and action plan can put you in an ideal position to make the most of your opportunities.

Written by

#FinancialPlanner helping 30 & 40-somethings build #wealth & think differently about #money • Top #FinancialAdvisor in #Boston • www.BeyondYourHammock.com

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