IPOs with Blinders on
Almost every week, there is another Silicon Valley company that announces that it’s going public. Most recently Lyft, soon to be followed by Uber, Slack, Airbnb, Stripe, Pinterest and who knows what other modern miracles of technology. Each of these companies will have initial valuations topping $1 Billion and will instantaneously create hundreds, if not thousands of mostly young, new millionaires and centi-millionaires. Unfortunately, most, if not all of these newly minted wealth holders are going to be heavily taxed for their brilliance. It never fails to puzzle why, by all appearances, none of these companies offer a program for pre-liquidity income tax planning. What should be offered is more than simple income tax planning; there should be a suite of comprehensive planning options available to the stakeholders of these companies available pre-IPO.
There are many opportunities for the brilliant minds who create these valuable enterprises to plan for their exit or their liquidity event with well informed, well considered planning options. Has anyone let the shareholders know that capital gains taxes are optional? Has anyone let them know that those living in California are likely going to lose close to 40% of their profits? Yes, they’re still walking away crazy rich but that doesn’t mean they shouldn’t have known their options.
There will be an onslaught of investment firms wanting to manage money and insurance agents who want to help with estate taxes (by selling life insurance to do so) but what really should happen is to have time and expertise to provide and guide through comprehensive planning to reduce or eliminate capital gains and estate taxes before one share is sold to the public.
Contact Two Hawks Consulting for more information today!