If your company goes public or is acquired by a public company, and you own equity options or company stock, you will be confronted with several decisions about how and when (or if) to exercise and sell those options. These are key considerations with both short and long-term ramifications for one’s wealth.
This was the case for Deborah, who came to Bordeaux Wealth Advisors with a decision to make after her company was acquired. Deborah held vested shares from her company which she had not yet exercised – and she faced a deadline to decide whether to exercise some or all of the ISOs before they were automatically converted to cash. But what would the tax implications be under either scenario?
Moreover, Deborah was juggling several investment accounts through various providers – all established at different periods of time, and she had no idea how they fit together into a comprehensive picture of her wealth.
With the ISO deadline approaching, Deborah realized she needed holistic wealth advisory that could help her determine the right tax and investment strategy and provide a clear picture of her overall financial situation.
With the help of Bordeaux Wealth Advisors and their detailed scenario analysis, Deborah was able to identify the ideal number of shares to exercise, where she could optimize her cash outlay (cash required to exercise) and expected gains while being mindful of Alternative Minimum Tax (AMT). The solution was just right for Deborah and balanced her risk tolerance with her current cash flow and liquidity needs.
Over time, Bordeaux’s detailed reporting and personalized client service allowed Deborah to understand her finances much more clearly, empowering her to purchase a home and plan effectively for other milestones.
It can be easy to become overwhelmed when trying to manage your equity compensation; tax regulations are complex and there are many factors to consider. Working with Bordeaux Wealth Advisors, Deborah was able to make financial decisions and look to the future with greater confidence.
