My Company Filed for an IPO. What Happens to My Options Now?
Filing to go public (an S-1) doesn't change your options by itself. Vesting continues on the same schedule, and nothing becomes sellable until the IPO actually prices and closes.
An S-1 filing is the company announcing its intent to go public, not the IPO itself. The company could still delay, withdraw, or price lower than expected. Your options keep vesting exactly as they did before the filing, and nothing about them becomes liquid until trading actually begins. Once it does, a lock-up agreement, typically 180 days, prevents you from selling regardless of how the stock performs. This post walks through what actually changes, when, and the tradeoffs around exercising before versus after the IPO prices.
What actually happens to my options when my company files to go public?
Nothing changes automatically. Filing Form S-1 with the SEC starts the public review process, but your vesting schedule, strike price, and option terms stay exactly as they were. The only thing that’s changed is that a specific, dated event, the IPO itself (!), is now visible on the horizon, which is often the trigger for people to start thinking seriously about exercising for the first time.
What is a lock-up period, and how long does it last?
A lock-up period is a contractual restriction, negotiated between the company and its underwriters, that prevents employees and other insiders from selling shares for a set window after the IPO. The industry-standard length is 180 days, though agreements can run anywhere from 90 days to a full year, and the SEC doesn’t mandate any particular length. Some companies now use staggered lock-ups instead of a single hard date, releasing a portion of shares early based on triggers like earnings reports or the stock trading above a certain price for a set number of days, rather than unlocking everything at once.
What is a quiet period, and is it the same thing as a lock-up?
No. A quiet period restricts what the company can say publicly, while a lock-up restricts what you can sell. The SEC’s quiet period limits the company (and often its employees) from making public statements that could be seen as promoting the stock before and shortly after the IPO, generally lasting a few weeks around the pricing date. It has nothing to do with your ability to exercise options. It manages communications, not trading, though your company’s own insider trading policy may separately restrict employee stock transactions during this window regardless.
Should I exercise before the IPO prices, or wait until after?
Both paths are available if your options are already vested and you’re not under a company-imposed restriction, and each carries a different cost. Exercising while the company is still private means paying your strike price against the company’s most recent 409A valuation, an independent appraisal of the private stock, typically lower than what the IPO ultimately prices at. Waiting until after the IPO means exercising against the public offering price instead, which can be substantially higher, meaning a bigger tax bill for the same shares. And you would still be locked up and unable to sell for months either way.
Does the IPO change how my options are taxed?
The IPO itself doesn’t change the tax rules, but it does change the numbers that go into them. Once the company is public, the 409A valuation process ends. Expensive independent appraisals are no longer needed, since the market sets the price directly. For incentive stock options (ISOs), whether you exercise before or after the IPO changes the “spread” (the gap between strike price and fair market value) that counts as alternative minimum tax (AMT) income, and a higher post-IPO price generally means a bigger AMT bill for the same number of shares.
Worked example
Say you have 10,000 vested ISOs with a $3 strike price. The company’s last private 409A valuation was $18 a share, and the IPO ends up pricing at $30 a share.
Exercise cost is the same either way: 10,000 × $3 = $30,000
Exercising before the IPO (against the $18 valuation): AMT spread = 10,000 × ($18 − $3) = $150,000
Exercising after the IPO prices (against the $30 price): AMT spread = 10,000 × ($30 − $3) = $270,000
For a single filer with no other AMT income, the difference in spread, $120,000, works out to roughly $30,000 more in AMT owed for exercising after the IPO instead of before, using the 2026 AMT exemption and rate. And in both cases, the shares are locked up and unsellable for months regardless of when you exercised. (This is a simplified estimate. Your actual AMT depends on total income, filing status, and other preference items, so it’s worth running your specific numbers with a tax professional before deciding.)
What should I actually watch for during this period?
A few dates matter more than the IPO date itself: the actual pricing date (when the offering price is set, often the night before trading begins), the lock-up expiration date (when you’re first legally able to sell), and any staggered early-release dates your company’s lock-up agreement includes. It’s also worth knowing that lock-up expiration doesn’t mean unrestricted trading forever after. Public companies impose their own recurring blackout periods around quarterly earnings, and employees with material non-public information can use a Rule 10b5-1 trading plan to schedule sales in advance and stay compliant with insider trading rules.
FAQ
How long is the lock-up period after an IPO? 180 days is the industry standard, though agreements range from about 90 days to a year, and some companies release shares in stages rather than all at once.
Can I sell my shares as soon as the company goes public? No. Even after the stock begins trading, employees and other insiders are contractually barred from selling until the lock-up period ends. Usually 180 days later.
Does filing an S-1 mean the IPO will definitely happen? No. Companies can delay, withdraw, or restructure their offering after filing. An S-1 is a stated intent, not a guarantee.
What is a quiet period, and how is it different from a lock-up? A quiet period limits what the company can publicly say around the IPO; a lock-up limits what you can sell. They run on different timelines and restrict different things.
Will my vesting schedule change because of the IPO? No, vesting continues on its original schedule. The IPO doesn’t accelerate or otherwise alter vesting unless your specific agreement says it does (some acquisition agreements include acceleration clauses, but a standard IPO typically doesn’t).
What to do next
The specific numbers that matter: your strike price, the current 409A valuation, and your company’s actual lock-up terms are in your grant agreement and any IPO-related paperwork the company sends you, not in general industry averages. You can model your own exercise cost and estimated tax impact with MoveWealth.
MoveWealth is not a broker-dealer, investment adviser, or lender. This is educational content, not financial, tax, or legal advice. Consult a qualified professional about your specific situation.