Your company told you the IPO was 12-18 months away. That was two years ago. Now you’re sitting on stock options but can’t access the money and you’re not sure waiting is still the smart move.
IPO delays create real problems for you. You need to make decisions about your compensation without knowing when—or if—that IPO is going to happen. This guide is part of our analysis of extended IPO timelines and their practical implications. Companies are staying private longer now because there’s so much private capital available they don’t need to go public like they used to.
So let’s get into what you need to know. When to exercise your options, how to access liquidity through secondary markets and tender offers, what you should negotiate when you’re joining a pre-IPO company, and how to protect yourself from post-IPO volatility like Navan’s 20% first-day drop.
What happens to my stock options if my company delays its IPO?
Your options don’t expire just because the IPO gets delayed. They’re still valid until they expire—which is typically 10 years from grant. And your vesting schedule keeps running on the same timeline.
What does change is when you can actually get cash for them. If you’ve already exercised your ISOs, you’ve triggered Alternative Minimum Tax on paper gains without any way to access liquidity. Meanwhile your company’s 409A valuation keeps climbing, which increases both your exercise costs and your AMT liability. Your compensation is basically locked up.
The good news is that many late-stage companies are addressing this with alternative liquidity options. SpaceX runs regular tender offers for employees. Stripe has ongoing liquidity programmes. Your company might do the same thing—or you might be able to sell on secondary markets if you get approval.
Here’s the reality though. Companies now stay private 10+ years versus 4-5 years in the 1990s. And only 0.2% of Carta’s 2018 cohort reached IPO. This isn’t a temporary blip—it’s the new normal.
How do I calculate the current value of my pre-IPO stock options?
The formula is simple: (Current FMV – Strike Price) × Number of Options = Theoretical Gross Value.
But that’s just the starting point. You need to subtract costs. Your exercise cost is the strike price multiplied by the number of shares. If you’re dealing with ISOs that trigger AMT, add that liability. For 2024, AMT kicks in when the spread exceeds $85,700 for individuals or $133,300 if married. The rate is typically 26-28% federal plus whatever your state charges.
Let’s work through an example. You have 10,000 ISOs with a $5 strike price and the current FMV is $35. Your spread is $300,000. At 26% AMT rate, that’s $78,000 in tax. Add in your $50,000 exercise cost and you’re looking at $128,000 total just to exercise. And you still haven’t sold a single share.
Thinking about secondary markets? Expect a 20-40% discount from fair market value. Employees who sold pre-IPO received 47% less than IPO value on average. Tender offers typically price much closer to FMV.
Here’s something worth checking though—QSBS eligibility. If your shares qualify and you’ve held them for 5+ years, you can exclude up to $10 million in capital gains from federal taxes. Make sure you verify this before you sell anything.
Use Secfi’s Stock Option Tax Calculator to work through the numbers. What matters is actual net proceeds after all costs, not some theoretical value on paper.
What is the difference between primary and secondary liquidity?
Primary liquidity is when your company raises capital by issuing new shares. The company gets the money, you don’t. And your ownership stake gets diluted in the process.
Secondary liquidity is when existing shareholders sell their shares to new buyers. You get cash. The total share count doesn’t change—ownership just transfers from one person to another.
Tender offers sit somewhere in between. The company or investors purchase shares from employees—it’s structured as a secondary transaction—but the company is coordinating the whole thing.
The distinction matters because secondary liquidity is your path to actual cash. Primary fundraising events might make your equity look more valuable on paper, but they don’t put money in your pocket.
There’s a catch though. Secondary transactions require corporate approval. And most companies (82%) restrict secondary sales entirely.
So if you want cash, you need secondary liquidity. Keep an eye out for tender offers or ask your company about approved platforms for selling.
Should I sell my shares on the secondary market or wait for the IPO?
Selling on secondary markets gives you immediate liquidity, price certainty, and control over tax timing. The downsides? You’re looking at a 20-40% discount, you need ROFR approval from the company, and there are limited buyers in the market.
Waiting for the IPO means you get the full public market price, no ROFR friction, and you can sell larger volumes. But you’re also dealing with post-IPO volatility—Navan dropped 20% on day one. Plus there’s the lock-up period (usually 6+ months) and the risk of bad market timing.
The decision between selling now and waiting depends partly on which exit path employee outcomes you’re evaluating. Sell on secondary if you need liquidity now or if your risk tolerance is low. Wait for the IPO if you can afford the volatility and you believe in the upside potential.
Here’s how to think about the breakeven point: Secondary Offer Price ÷ (1 – Discount Rate). So if you get an offer at $12 with a 30% discount, the implied fair value is around $17. That means the IPO needs to exceed $17 after accounting for first-day volatility and lock-up timing for waiting to make sense.
Keep in mind that secondary sales require $100,000 minimum on most platforms. And companies can block your sale entirely or exercise their right to buy the shares themselves.
One option worth considering: sell a portion for diversification and hold the rest for upside. You don’t have to make it all-or-nothing.
How do tender offers work and should I participate?
A tender offer is when your company or an outside investor offers to purchase shares from employees at a set price. The company coordinates everything—you just decide whether to participate or not.
The typical structure is you can sell 20-30% of your vested equity at or near the 409A fair market value. Morgan Stanley shows 75% subscription with 50% participation on their platform, which tells you these are popular when they’re available.
The advantages are clear: you get pricing much better than the 20-40% discount on secondary markets, the approval process is simplified because the company is running it, and all the compliance requirements are managed for you.
You need to weigh your immediate cash needs against the potential upside and your tax planning situation. If you’re close to QSBS qualification (5 years of holding), selling now means you forfeit the $10 million capital gains exclusion. On the other hand, if you’ve already triggered AMT, selling might help you recover those tax credits.
Not every company does this. SpaceX, Stripe, OpenAI, and Figma run tender offers. It’s typically the late-stage, well-funded companies that can afford to provide this liquidity.
Selling 20-50% of your holdings gives you diversification while keeping you in the game for future upside. It’s rarely the wrong move to take some money off the table when it’s actually being offered.
What is AMT and how does it affect my stock option decisions?
Alternative Minimum Tax is a parallel tax system. You pay it when you exercise ISOs—it’s calculated on the spread between your strike price and the current fair market value. And you owe it even if you haven’t sold anything or received any cash.
This creates an immediate tax bill—28% federal plus your state rate—on paper gains. And you don’t have any liquidity to pay it with.
AMT kicks in when your spread exceeds $85,700 for individuals or $133,300 if you’re married (2024).
Here’s an example. You have 10,000 ISOs with a $5 strike and the FMV is $25. Your spread is $200,000. At the 28% AMT rate, you owe $56,000 in taxes. And you haven’t sold a single share yet.
This AMT problem blocks a lot of people from exercising their options when it would actually make sense to do so.
There are some strategies you can use. Exercise incrementally to stay below the threshold each year. Or coordinate your exercises with low-income years when you have more room under the AMT exemption.
Non-recourse financing like Secfi offers another option—they’ll advance you cash to cover both the strike price and the AMT liability. You only repay them from proceeds when there’s a liquidity event. If the company fails? You owe nothing.
The alternative is to exercise NSOs instead, which avoid AMT entirely but trigger ordinary income tax at exercise instead.
Here’s the trade-off to understand: ISOs get you long-term capital gains treatment (20% federal) if you hold the shares for two years from the grant date and one year from exercise. NSOs get taxed as ordinary income (up to 37% federal) at the moment you exercise them.
What many people do is sell some shares at exercise to cover the taxes and hold the rest. It limits your AMT exposure while preserving your upside potential.
What should I negotiate for when joining a pre-IPO company with uncertain IPO timeline?
The most valuable thing you can negotiate is a post-termination exercise window (PTEW) extension. The standard is 90 days after you leave the company. Negotiate for 5-7 years instead.
Why does this matter so much? With a 90-day window, if you leave the company you’re forced to either exercise immediately (paying both the strike price and AMT) or you forfeit your options entirely. With a 5-7 year PTEW, you can leave the company and wait for the IPO to happen before you have to make any decisions.
Pinterest extended their PTEW to seven years for their employees. You need to negotiate this upfront though—don’t join the company hoping they’ll give you special treatment later.
Early exercise rights are another thing worth asking for. This lets you exercise unvested options immediately with an 83(b) election. It starts your capital gains holding period clock and your QSBS 5-year qualification period before the shares even vest.
If the company can’t or won’t offer these protections, negotiate for a larger grant to compensate you for the illiquidity risk you’re taking on.
The time to raise all this is at the offer stage, before you sign anything. Once you’ve joined, your leverage basically disappears.
If they push back saying these are non-standard terms or too complex to implement, you can counter that PTEW extensions are becoming increasingly common at late-stage companies and early exercise programs are trivial to set up administratively.
Don’t try to negotiate everything. Pick the 2-3 items that matter most to you. PTEW and early exercise rights provide the most value in the long run.
How can I protect against post-IPO volatility like the Navan example?
Navan’s October 2025 IPO priced at $11.50 and dropped 20% to $9.20 on day one. This is a company with $613M in revenue, 32% growth, and strong underlying fundamentals. It still fell.
The IPO valued the company at 10x revenue. By the end of day one, the market had repriced it to 7.7x. Investors simply decided that 10x was too rich a valuation.
And Navan isn’t alone. Expensify is down 94% from its $27 IPO price to $1.64. Meanwhile ServiceTitan popped 42% in the same quarter. Understanding post-IPO performance in 2025 helps frame expectations in the current market. The point is that strong fundamentals don’t guarantee positive stock performance.
So how do you protect yourself? Start by assessing the risks around revenue multiple compression, category headwinds, and overall market conditions before the IPO.
Plan your sale strategy before the lock-up period expires. Traditional IPOs come with 180-day lock-ups. When that window finally opens, sell a portion of your holdings immediately instead of waiting to see if the price goes up.
Use dollar-cost averaging to spread out your sales. Sell in tranches over 6-12 months rather than trying to time the perfect exit.
As a general rule, hold a maximum of 10-15% of your net worth in any single stock. Just because your company went public doesn’t mean you should hold onto everything.
You need to balance QSBS timing considerations against concentration risk. Don’t let tax planning paralyse you into taking excessive risk.
Here’s a useful mental exercise: would you take a cash bonus equal to the value of your equity and use it to buy your company’s stock on the open market? If the answer is no, then you should be selling.
Conclusion
Stock option decisions in today’s extended IPO environment require balancing multiple factors: your immediate cash needs, tax implications, risk tolerance, and belief in future upside. Understanding the broader IPO market landscape helps you make informed choices about when to exercise, whether to pursue secondary liquidity, and how to protect yourself from post-IPO volatility. The key is to avoid all-or-nothing thinking and take a strategic approach to managing your equity compensation.
FAQ
How long do companies typically stay private before IPO now?
Most late-stage companies stay private significantly longer than they did in previous decades. The extended timelines are driven by abundant private capital, the high costs of regulatory compliance, and companies choosing to prioritise growth over liquidity events.
Can my company prevent me from selling my shares on secondary markets?
Yes, through Right of First Refusal (ROFR) clauses in your option agreement. Companies can block sales entirely, approve them selectively, or exercise their ROFR to purchase the shares themselves. In fact, most companies (82%) restrict secondary sales entirely. That said, many late-stage companies are now approving secondary sales or offering tender offers to provide liquidity.
What is a 409A valuation and how often does it change?
A 409A valuation is the IRS-compliant fair market value for shares in a private company. It’s used to set option strike prices and calculate AMT liability. Companies are required to update their 409A at least annually or whenever there’s a material event like a funding round. As companies get closer to IPO, the 409A values tend to climb, which increases your AMT exposure.
Should I exercise my options before leaving my company?
It depends on several factors. Most employees only have 90 days to exercise after they leave, which forces a quick decision. You need to consider whether you can afford the exercise cost plus AMT, how much you believe in the company’s future success, and what your tax planning situation looks like. Non-recourse financing from providers like Secfi can help you fund the exercise if you believe in the upside but don’t have the liquidity.
How do I verify if my shares qualify for QSBS tax benefits?
You need to check a few things. Your company had to have gross assets under $50 million when the shares were issued. You need to have held the shares for 5+ years. The company needs to be structured as a C-corp. And the company has to use 80%+ of its assets in a qualified trade or business. If all those boxes are checked, you can exclude up to $10 million in capital gains from federal taxes, which is a massive benefit.
What are the best secondary market platforms for employees?
The major platforms are Forge Global (which has the largest liquidity), Carta (which integrates with your company’s cap table), and Nasdaq Private Market (which has the credibility of being exchange-backed). Which platform you use often depends on which ones your company has approved for secondary sales. Forge typically offers the most buyer competition. For secondary market examples of how major companies provide employee liquidity, see how unicorns structure these programmes. Just remember you’re looking at 20-40% discounts from FMV and you need company approval through their ROFR process.
How long is the lock-up period after IPO?
Traditional IPOs impose 180-day lock-up periods on employees and early investors. Direct listings often have no lock-up or much shorter periods. SPAC mergers vary all over the place. The lock-up terms for your company will be disclosed in the S-1 filing, so check there for your specific situation.
What happens to my stock options if my company never goes public?
Your options remain valid until they expire (typically 10 years from grant) or until the company gets acquired. If there’s an acquisition, the acquiring company will typically assume your options, convert them to their stock, or cash them out based on the acquisition price. If the company fails entirely, your options become worthless. Secondary sales or tender offers might be your only shot at liquidity if an IPO never materialises.
How much of my vested equity should I sell in a tender offer?
Consider selling 20-50% of your holdings to balance diversification against keeping upside potential. The factors to weigh include how concentrated your equity is in your overall net worth, what your cash needs are, how much you believe in future upside, and the tax timing around QSBS qualification. The key is to avoid all-or-nothing thinking—a partial sale reduces your risk while still letting you participate in future growth.
What is non-recourse financing for stock options?
Providers like Secfi will advance you cash to cover both the strike price and the AMT liability, but without requiring personal repayment if things go wrong. You only repay them from the proceeds when a liquidity event actually happens—if the company fails, you don’t owe them anything. This preserves your ownership while solving the immediate cash constraint problem, though the financing costs will reduce your net proceeds when you eventually sell.
How do I calculate if waiting for IPO is worth the secondary market discount?
Work out the breakeven point: Secondary Offer Price ÷ (1 – Discount Rate). So if you get a secondary offer at $12 with a 30% discount, the implied fair value is around $17. For waiting to make sense financially, you need to believe the IPO price will exceed $17 after accounting for first-day volatility and lock-up timing. But you also need to factor in your personal risk tolerance and whether you actually need the cash now.
Why do some IPOs perform well while others drop immediately?
First-day performance comes down to how accurately the company was priced, what the overall market conditions are like, and what’s happening in that particular sector. ServiceTitan popped 42% while Navan dropped 20% in the same quarter, which shows you just how wide the range of outcomes can be. Strong company fundamentals like revenue growth and profitability don’t guarantee positive stock performance—investor demand and market sentiment matter just as much.
