The first 90 days after lockup: a decision framework

I talk to a lot of people in the months around their company's IPO, and I've noticed the same pattern over and over. For months, the lockup is the thing standing between you and your money. Then it expires — and suddenly nothing is standing between you and your money, and most people freeze. They spent a year waiting for a window to open and no time at all deciding what to do when it did.

That freeze is expensive. Not because the stock necessarily goes down — sometimes it goes up — but because no decision is still a decision. Doing nothing means choosing to keep, say, 60 or 70 percent of your net worth in one company. Most people would never make that choice on purpose. They make it by default.

So let's talk about what a deliberate first 90 days actually looks like.

First, know what a lockup actually is

A lockup is a contractual agreement — usually between you, the company, and the underwriters — that prevents insiders and employees from selling for a set period after the IPO, typically somewhere between 90 and 180 days (the SEC has a short definition on Investor.gov). The point is to keep a flood of insider shares from hitting the market the week the company goes public.

Which means when it expires, the flood happens anyway — just on a schedule everyone can see coming. The classic academic study on this, by Field and Hanka in the Journal of Finance, looked at 3,217 lockup expirations and found trading volume jumps about 40 percent permanently in the week the lockup ends, with an average abnormal price decline of about 1.8 percent around the event — larger for venture-backed companies. Everyone knows the date. It's priced in, mostly. Which is exactly why trying to outsmart it is usually wasted effort.

Days 1–30: get the facts on paper

Before you sell a single share, you need four numbers written down. Not in your head — on paper.

• What you own, by type. RSUs that vested at IPO, options you've exercised, options you haven't, ESPP shares. Each one is taxed differently, and the order you sell them in matters.
• Your cost basis and holding period on each lot. Shares held over a year get long-term capital gains treatment. Shares held under a year get taxed as ordinary income on the gain. On a big sale, that difference alone can be six figures.
• What you actually owe on the shares you already have. Here's the trap almost everyone hits: when RSUs vest, your company typically withholds at the IRS flat supplemental rate — 22 percent on supplemental wages up to $1 million (IRS Publication 15). If your real marginal rate is 32, 35, or 37 percent, you are under-withheld right now and the bill shows up at tax time. Add the 3.8 percent net investment income tax on gains once your income crosses $200K single or $250K married, and state tax on top.
• Your concentration number. Company stock divided by total net worth. Just calculate it. Most people I meet have never done this, and the number is usually higher than they guessed.

This is also the month to check whether you're subject to a trading policy, blackout windows, or — if you're an officer or director — whether you should be selling through a pre-planned 10b5-1 plan instead of trading ad hoc. (I wrote a separate piece on those plans, because the SEC tightened the rules in 2022 and the details matter.)

Days 30–60: decide your target, not your trade

The question is not "should I sell?" The question is "what percentage of my net worth am I comfortable having in this stock, on purpose, going forward?" For most people the honest answer is somewhere between 5 and 25 percent. Almost nobody, when asked directly, says 70.

Why the urgency to get this number down? Because the long-run record of individual stocks is genuinely sobering. J.P. Morgan has been updating a study called The Agony and the Ecstasy for two decades. Looking at U.S. stocks since 1980, roughly 40 percent suffered a catastrophic decline — defined as falling 70 percent or more from their peak and never recovering — and about two-thirds underperformed the broad market over their lifetimes. Your company might be one of the great exceptions. The people at the companies that weren't thought the same thing.

Once you have a target, the gap between where you are and where you want to be becomes a schedule. Maybe you get there in two quarters. Maybe, for tax reasons, it takes two years. That's fine — the point is that it's planned, not postponed.

Days 60–90: execute the boring way

Once the target and schedule exist, execution should be almost mechanical.

• Sell by lot, deliberately. Generally highest-basis and long-term lots first, but this is exactly where a CPA earns their fee — especially if you have ISOs and AMT in the picture.
• Set aside the tax before you spend a dollar. A separate account, funded the week you sell. Estimated payments if the numbers are big. The saddest meetings I have are with people who spent the gross.
• Automate the rest. Standing sell orders on a calendar, or a 10b5-1 plan if your role requires one. The whole point is to take the daily "should I sell today?" question off your plate, because that question has no good answer and asking it every morning is corrosive.
• Have a destination for the proceeds. Diversifying out of one stock only helps if the money lands somewhere sensible — a diversified portfolio, debt payoff, the emergency fund you never built. "Cash sitting in checking" is not a plan, though it beats concentration.

What I'd leave you with

The lockup expiration feels like the event. It isn't. The event is the 90 days after — the window where you either convert a piece of paper wealth into an actual financial life, or drift into a concentration you never chose. You don't need to be clever here. You need to be deliberate, a little boring, and honest about taxes. That combination wins.

If your lockup date is on the calendar and you want a second set of eyes on the plan — the target, the schedule, the tax math — that's exactly what my diagnostic process is built for. Reach out. I'm happy to talk it through.

This article is for informational and educational purposes only and is not investment, legal, or tax advice. Nothing here is a recommendation for your specific situation — talk to your advisor and your CPA before acting on anything you read. Fathom Wealth is the private wealth practice of Cameron Hunt, conducted through Savvy Advisors, Inc., an SEC-registered investment adviser. Tax figures cited reflect rules in effect for the year noted and can change.