Money Talk with Malik | Financial Planning for Builders

Key Takeaways

The 12 months before a liquidity event is when tax planning has the most leverage; waiting until after the event is often too late
RSU vesting cliffs and lockup periods can trap you in a concentrated position longer than you expect
Charitable giving strategies like Donor-Advised Funds work best in the year of the event, not after
Getting your personal balance sheet in order before you have liquidity reduces the stress of making big financial decisions under time pressure
Estate planning documents (trusts, wills, beneficiary designations) should be updated before, not after, a significant wealth event

I talk to a lot of founders after their company gets acquired or goes public. Some of them come in a few months after the close, and they're sitting on a great outcome. But then we start going through their situation and it becomes clear pretty quickly that a few decisions made 6 or 12 months earlier would have saved them a significant amount of money.

I'm not saying they made bad decisions. They were focused on building the company, right? That's literally their job. The financial planning piece just wasn't getting the same attention.

So this is the conversation I try to have before that window closes.

What should founders do 12 months before a liquidity event?

The 12-month mark is not arbitrary. It's when you have enough clarity that planning is meaningful, and enough runway that the strategies actually have time to work.

Here's how to think about the checklist.

H2: Review your equity position and vesting schedule

Before anything else, you need to understand exactly what you have.

Pull your cap table. Know your vesting schedule for every grant. Know your exercise prices. Know the spread between your strike price and the current 409A valuation.

For incentive stock options, the alternative minimum tax implications depend heavily on when you exercise and what the spread is at the time. Exercising early, before the value runs up, can significantly reduce your AMT exposure. But the window to do that depends on where you are in the vesting schedule.

For RSUs, the tax hit comes at vesting, not at sale. If you have a large RSU vest scheduled around the time of an exit, that income is taxed as ordinary income regardless of how long you've held the underlying shares.

Realistically, most founders don't have a complete picture of this until someone sits down and maps it out. Do that now.

H2: Understand the lockup period and what it means for your concentration risk

Going public does not mean you can immediately sell your shares.

Standard IPO lockup periods are 180 days. So if your company goes public in January, you can't sell until July. And the market can move a lot in six months, right?

Acquisitions often come with their own vesting requirements for the acquirer's equity. A standard earn-out might require you to stay for two to four years to fully vest into the consideration you're receiving.

Understanding this matters because it affects your ability to diversify. If you're going to be sitting in a concentrated position for 12 to 18 months after the event, you need to think about your financial life during that window. Living expenses, taxes owed on the initial liquidity, your cash position.

You got to be smart about not spending against paper wealth you can't access yet.

H2: Get your tax estimates in order for the year of the event

The year of a liquidity event is usually the highest-income year of most founders' lives. The tax bill can be jarring if you're not ready for it.

Work with your CPA now to model out different scenarios. What does your tax liability look like if the deal closes at different valuations? What's your federal rate on long-term capital gains versus ordinary income? Does your state have capital gains tax, and if so, is there anything to be done about state residency?

This is also the year to think seriously about charitable giving strategies. Donating appreciated stock to a Donor-Advised Fund in the year of the event gives you the full fair market value deduction while avoiding capital gains. The fund can then distribute to charities over time. You don't have to decide which charities get the money right away.

For 2026, you can deduct cash contributions to a DAF up to 60% of your adjusted gross income. Contributions of appreciated stock are deductible up to 30% of AGI. If you have a big income year, this can be a meaningful offset.

H2: Update your estate plan before, not after, wealth transfers to you

Most founders don't have a will. Or they have one from years ago that hasn't been updated since the company was worth nothing.

A liquidity event changes everything about estate planning. The right structure depends on the size of the outcome and your goals, but at a minimum you need current documents.

That means a will, durable power of attorney, healthcare directive, and updated beneficiary designations on all retirement accounts and life insurance policies. Beneficiary designations on financial accounts override your will. If your ex-spouse is still listed as beneficiary on your 401k, they're getting that money. The will doesn't matter.

For larger outcomes, you may want to explore trusts. A revocable living trust avoids probate and keeps your financial affairs private. An irrevocable trust can remove assets from your taxable estate if you're looking at estate tax exposure. For 2026, the federal estate tax exemption is $13.99 million per individual. If your outcome is heading toward that territory, start the conversation now.

H2: Think about your personal balance sheet beyond the exit proceeds

Founders often have their entire net worth tied up in one thing. That changes after a liquidity event.

But what does your financial life look like outside the company? Do you have an emergency fund? Do you have retirement accounts funded? Do you have life insurance and disability insurance that reflect your actual financial situation?

Most of the founders I work with have been so focused on the company that the personal balance sheet has been running on autopilot, or not running at all.

This is the time to get the full picture. Not because you need to be anxious about it, but because knowing where you stand gives you a clear starting point when the proceeds actually land.

H2: Build your advisory team before the event, not after

The 60 days after a liquidity event is a bad time to be interviewing CPAs and financial advisors. You're emotional, you're busy, and decisions made quickly under pressure rarely turn out to be the best ones.

Get your team in place before the event. A CPA with experience in startup equity and executive compensation, a financial advisor who understands concentrated stock and tax-efficient diversification, and an estate attorney if your outcome warrants it.

These are not expensive relative to what's at stake. And having the right people in place means the decisions get made thoughtfully, not reactively.

Summary

A liquidity event is a once-in-a-career or once-in-a-lifetime outcome for most founders. The financial planning that happens in the 12 months before that event has more leverage than anything you do afterward.

The boring stuff matters here, right? Equity vesting, tax projections, estate documents, advisory team. None of it is as exciting as the deal itself. But getting it right is what determines how much of that outcome you actually keep and what you do with it.