305 | How to Reduce Taxes on IPO Wealth (Before It’s Too Late)

Hilary Hendershott: The question is not whether you will pay taxes. The question is whether you’ll pay them on your terms.

I’m Hilary Hendershott. I’m the founder of Hendershott Wealth Management.

We publish content to help you strengthen your financial life. Grow your net worth and feel supported through the moments that matter. If that feels like the kind of guidance you might be looking for, please take just a moment to like this video and subscribe to my channel.

Thanks for doing that. Three mega IPOs, SpaceX, OpenAI, and Anthropic, are expected to unlock enormous value this year, and without careful planning, that kind of liquidity can unlock enormous tax bills too. If you don’t have a plan, I promise you the IRS and the Franchise Tax Board do. Some taxes you can’t avoid.

Some you can minimize. Some you can manage strategically. Capital gains taxes, for example, are often optional in timing, but only if you’re thoughtful and disciplined.

So what should you do to hold the tax man at bay? One strategy I often see, especially with women in tech, is holding significant equity compensation.

Is refusing to sell and I understand it. Selling stock and immediately handing over more than a third to the government is painful. But never sell, only defers taxes, and it leaves you permanently concentrated. Your company may be thriving, but history is full of companies that looked unstoppable until they weren’t. At the turn of the century,

Lucent went from the eighth most valuable company in the world to nearly worthless in just a few years. The stock dropped 98%. Concentration risk is real. Another popular strategy, especially when rates were low, is borrowing against your stock instead of selling. This differs in taxes, too, but interest compounds, and you are still concentrated.

Only now you’re also leveraged. That can amplify risk at exactly the wrong time. Then there are opportunity zone investments. I understand the appeal; the tax treatment is attractive, but focusing too heavily on tax treatment lets the tail wag the dog. You should never sacrifice investment quality or experience just to chase a tax benefit.

Tax benefits only matter if the underlying investment holds up. Qualified exchanges, both 351 and 721 structures, are legitimate ways to defer taxes while diversifying, but they come with restrictions that make them unsuitable for many clients. These can be useful tools, but only in selective situations

Often, as part of a broader tax-aware strategy. So what should you do?

Well, at my firm, Hendershott Wealth Management

Tax-Aware, long/short investing is our preferred approach because it can provide meaningful tax flexibility without requiring you to sacrifice returns or take on unnecessary market risk.

It’s not a magic trick; it’s a disciplined strategy. When implemented properly, it allows us to harvest losses intentionally. And use them to offset gains elsewhere that can give you more control over when and how capital gains are realized. For women in tech with concentrated equity, that flexibility can be powerful, and expertise matters.

Tax-aware, long/short is relatively new at the RIA level. Most advisors are experimenting with it while managing dozens of other client relationships. My firm’s chief investment officer has education and experience you would typically find at a large family office where strategies like this have been implemented for years.

That depth matters. These strategies require careful oversight, continuous monitoring and technical precision. We don’t implement them casually, and we do not implement them for everyone because when millions of dollars in taxes are at stake, you need more than a tactic. You need an integrated strategy, one that coordinates your investments, your tax exposure, liquidity, timing, and long-term goals.

You don’t want your tax lawyer managing your portfolio.

And you do not want your investment manager ignoring your tax reality. You want both. You want coordination, the tax man cometh. The question is not whether you will pay taxes. The question is whether you’ll pay them on your terms. If this was helpful, subscribe to my channel, and I’ll see you in the next video.