You’ve poured years into building your company. Sleepless nights, product pivots, fundraising cycles — all with the dream of creating something meaningful. Now, an acquisition is finally on the horizon.
But alongside the excitement comes a wave of questions:
- What will my tax bill look like?
- Should I exercise my options now or later?
- How do I make sure I actually keep as much of this wealth as possible?
The truth is, many founders feel unprepared for the financial side of their own success. And it’s not because they’re careless — it’s because the system is complex, and most advisors don’t explain it clearly. But here’s the good news: with a few smart, well-timed moves, planning for your exit is far easier (and more impactful) than you might think.
Why Founders Face This Challenge
Founders are in a unique position:
- Your shares often have a near-zero cost basis, which means big potential gains — and big potential taxes.
- Liquidity events like acquisitions, IPOs, or secondaries often move quickly, leaving little time for strategy.
- The alphabet soup of QSBS, ISOs, AMT, and 409A valuations can feel like a maze.
- And without a clear plan, it’s easy to miss opportunities that could save you millions.
What’s at Stake
Poor planning can lead to:
- Missing out on up to $15M (or more) of tax-free gains through the Qualified Small Business Stock (QSBS) exemption.
- Triggering unnecessary Alternative Minimum Tax (AMT) when exercising options.
- Having to sell more shares than you want, just to cover tax obligations.
- Losing the chance to set up trusts, charitable vehicles, or family structures before the exit clock runs out.
The Myth of Complexity
A lot of founders assume that tax and exit planning is a nightmare — endless meetings with lawyers and accountants, piles of paperwork, and opaque strategies that only apply to billion-dollar exits.
In reality, most of the heavy lifting comes down to a handful of simple, well-timed decisions. The earlier you start, the more straightforward it becomes.
Simple Steps to Start
Here are some of the most effective strategies:
- Exercise Early: Exercising ISOs or founder shares while valuations are low can lock in QSBS eligibility and minimize AMT risk.
- Leverage QSBS: Understand if your shares qualify and how to maximize the exemption (stacking, gifting, or reinvestment strategies).
- Plan Secondary Sales Thoughtfully: Consider tax implications before selling — there are structures that reduce the burden.
- Diversify Post-Exit: Avoid having your financial future tied entirely to one company’s outcome.
- Engage Experts: Surround yourself with advisors who understand founder equity — CPAs, attorneys, and wealth managers who live in this world.
The Bottom Line
Exit events don’t need to be stressful or overwhelming. With early action and the right guidance, planning for your startup exit is much easier than most founders realize — and the payoff can be life-changing.
If you’re a founder staring at a potential liquidity event, the best time to start planning is now.