What happens to RSU after IPO?

Because “If your RSUs vest when your company is still private [aka, single-trigger vesting], you’ll owe taxes but not be able to sell the shares for the money you’ll need to pay the taxes.” You waited until the company went IPO and until the lockup period expires, and then the shares were yours for tax purposes.

What happens to pre IPO?

A pre-IPO placement is a sale of large blocks of stock in a company in advance of its listing on a public exchange. The purchaser gets the shares at a discount from the IPO price. For the company, the placement is a way to raise funds and offset the risk that the IPO will not be as successful as hoped.

Does an IPO trigger vesting?

Generally, the first trigger is time-based vesting and the second is a change in control or a liquidation event like an IPO. Gains from the value of the RSUs are taxable once both triggers occur, however, now that the shares are publicly traded, employees can sell shares to cover their tax obligation.

Why can’t I sell my vested RSUs?

When they vest, you have to pay taxes on them. If your RSUs vest when your company is still private, you’ll owe taxes but not be able to sell the shares for the money you’ll need to pay the taxes. Why can’t you sell the shares? Because your company is private! (This is starting to feel circular.)

Do employees of private companies pay income tax on vested RSUs?

However, employees of private companies are not able to sell any of their shares to pay income tax. Since private companies have not yet had an IPO, their stock is still illiquid. This situation could put employees in an incredible bind and force them to come up with personal cash to pay income tax on stock received from vested RSUs.

How long does it take for RSUs to vest after IPO?

With IPOs comes a “lockup period” of 90-180 days, after which your RSUs finally, fully vest. But if your vesting dates have been happening for several years now, you’ve been building up quite the collection of not-completely-vested RSUs. Now that your company has IPOed and the lockup period is over, BAM! they all finish vesting on the same day.

When can employees sell their shares after an IPO?

Because employees were allowed to sell their shares six months after the IPO, they could raise cash to pay taxes by selling shares at that time. Double-trigger vesting was a major innovation to RSUs.