Executives at a Liquidity Event

Lake House Private Wealth Management works with senior executives in the window around a liquidity event — the twelve months before a deal closes and the two to three years after. In that window, a handful of decisions get made once and then can't be revisited: how your equity is treated at close, whether a Section 280G excise tax applies to you, when you sell concentrated stock and under what plan, and which tax year each dollar lands in. We are an independent fiduciary firm, which means we are paid by you and not by anyone selling you a product. Chris Gatsch, our Managing Partner, spent his career inside JPMorgan Chase and Bank of America Merrill Lynch before building this practice — he has seen how these packages are drafted from the other side of the table.

This is you if...

• Your company announced an acquisition and you have no idea what happens to the RSUs vesting next March.
• You have incentive stock options you exercised last year, and your CPA used the phrase "alternative minimum tax" in a tone that worried you.
• Someone in HR mentioned "280G" and a "cutback," and you nodded like you understood.
• More than 40% of your net worth is in one ticker, you know it, and every time you think about selling you decide to wait one more quarter.
• You're in a blackout window roughly half the year, and you've never set up a 10b5-1 plan because the process looked like more trouble than it was worth.
• Part of your deal consideration is going into escrow for eighteen months, and part is an earnout you don't control — and you're not sure how either gets taxed.
• Your withholding on a large vest came in at the supplemental flat rate, and you have a quiet suspicion that isn't going to be enough.

If three or more of those landed, this page is written for you.

What's actually at stake

The mistakes in this window are unusually expensive because most of them are one-way doors.

280G is a cliff, not a ramp. If the present value of your change-of-control compensation reaches three times your base amount — a five-year average of your W-2 income — everything above one times that base amount becomes an excess parachute payment. A 20% federal excise tax applies to you personally, on top of ordinary income tax, and it isn't deductible. Crossing the line by a small margin can cost six figures. Executives with modest salaries and heavy equity are the most exposed, because a low base amount produces a low threshold.

Tax years don't reopen. A cash-out of unvested RSUs at close is ordinary compensation income in the year it's paid. Stack that on a full year of salary and bonus and you move through brackets, trigger the additional Medicare tax, and lose deductions. Sequencing charitable gifts, deferred compensation elections, and sale timing across two or three tax years is something you do beforehand or not at all.

The ISO/AMT trap runs on a calendar. Exercising incentive stock options creates a bargain element that is invisible for regular tax and very visible for AMT. The bill arrives the following April, and if the stock fell in between, you can owe tax on a gain you no longer have.

Concentration is a risk you already accepted without pricing it. A single position that built your wealth is not the position that preserves it. The decision comes down to what a permanent impairment in that one stock would do to the plan you actually want to fund.

Escrow and earnout dollars aren't yours yet. Holdbacks, indemnity escrows, and earnouts carry their own timing, imputed-interest, and installment-reporting questions. Treating them as cash-in-hand is how people over-commit.

What we do for you

1. Read your actual documents. Merger agreement equity provisions, grant agreements, your change-of-control or severance plan. We're looking for whether your unvested equity is assumed, cashed out, or accelerated, and whether your acceleration is single-trigger or double-trigger — and if double-trigger, exactly how "good reason" is defined. That clause is what protects you when the acquirer quietly restructures your role eight months after close.

2. Model 280G before the numbers are locked. We build the base amount and the safe harbor, identify whether you're over, and work through the levers — valuing non-compete allocations, reasonable-compensation arguments, and, in private-company deals, the shareholder-approval exception that can cleanse parachute payments if the required supermajority approves and the individual waives the payments first. This is done alongside the company's counsel and accountants, to the dollar. It is not a DIY exercise.

3. Build the selling architecture. For public-company holdings, that usually means a Rule 10b5-1 plan. Under the amended rule, directors and officers face a cooling-off period of the later of 90 days after adoption or two business days after the next quarterly disclosure, capped at 120 days; other employees wait 30 days. Overlapping plans are restricted and single-trade plans are limited to one per twelve months. The practical consequence is simple — the plan has to be adopted long before you want to sell.

4. Sequence the tax across years, not months. ISO exercise-and-hold versus disqualifying disposition. AMT credit recovery. Charitable timing, including donor-advised funds and appreciated-share gifting in the highest-income year. Deferred compensation elections that must be made before the money is earned. Estimated payments so April isn't a surprise.

5. Unwind concentration on a written schedule. A pre-committed, calendared plan for reducing a single-stock position — sized to your goals, not to a market view — so the decision isn't remade every quarter based on how the stock traded that week.

6. Rebuild the portfolio for the life after. Once the equity converts to cash, the question changes from accumulation to funding. Assets custodied at Schwab, Fidelity, or Raymond James, with reporting and cash flow built around what you're actually paying for.

How the relationship works

1. A 30-minute call. You describe the situation. We tell you whether the timing is right and what we'd look at first. No documents required.

2. A working session. You send the grant agreements, the plan documents, and your last two tax returns. We come back with the specific decisions in front of you and the dates they close.

3. A written plan. Sequenced by deadline, not by topic. It says what happens, when, and who does it — you, us, your CPA, or your attorney.

4. Ongoing management. Portfolio management, tax coordination, and course correction as the deal terms change. They usually change.

Related guides

• What Happens to My RSUs When My Company Is Acquired? — /rsus-company-acquired.html
• Section 280G Golden Parachute Payments — /section-280g-golden-parachute.html
• The ISO/AMT Trap — /iso-amt-trap.html
• Employer Stock Concentration — /employer-stock-concentration.html
• Glossary of Equity and Liquidity Event Terms — /glossary.html

Let's talk before the window closes

If a deal is in motion — or you think one might be — the useful time to have this conversation is now, while the decisions are still open. A first call takes thirty minutes and costs nothing.

It's a conversation, not a pitch.

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# Compliance and publishing notes

Not for publication. Internal working notes for One Seven review.