Corporate deal activity has picked up meaningfully in 2026, and with it, a wave of founders and executives are asking the same question: What should I be thinking about before my company goes public, merges or is sold? The good news, in our view, is that with advance planning—ideally months, or even years, before a transaction—there can be significant opportunities to manage taxes, protect wealth and facilitate philanthropic goals. Here are five key considerations to discuss with your advisory team well before the ink dries on any deal.

1. Evaluate Your Equity Awards and Options

Many founders and early employees receive restricted stock that vests over time—sometimes over three, four or five years, with typically equal annual installments. Generally, you owe tax when shares vest, based on the value at that time. If the stock is appreciating, waiting to pay tax on vesting can be costly.

Consider this example: You are granted $100,000 of stock (100,000 shares at $1), with 25,000 shares vesting annually over four years. If the stock rises to $4, $8, $12 and $16 per share at the end of years one through four, you will report $100,000, $200,000, $300,000 and $400,000 of ordinary income in those respective years—a total of $1 million taxed at up to a 37% rate, for a tax liability of roughly $370,000.¹

Alternatively, an “IRC Section 83(b) election” allows you to include the value of the entire award in income within 30 days of the grant—when it is still worth just $100,000. At a 37% rate, that equates to $37,000 of current federal tax. Everything above $1 per share is converted to long-term capital gain, taxed at a top rate of 20%—a meaningful savings on all future appreciation. You also start the long-term capital gain holding clock immediately, meaning that you could sell shares as they vest without waiting an additional year. The risk: You pay tax upfront on shares that may never vest or that could decline in value.

Stock options deserve similar attention. With incentive stock options, the spread between the strike (or exercise) price and fair market value is not subject to regular tax at exercise, but it is an Alternative Minimum Tax preference item (added into income when calculating AMT). Exercising early—while the strike price and fair market value remain close—reduces (or in some cases eliminates) the AMT preference item that would otherwise apply. If you then hold the shares two years from grant and one year from exercise, the full gain on the sale is taxed as long-term capital gain at 20%, rather than at ordinary income rates of up to 37% if you wait and exercise and sell simultaneously. Non-qualified stock options work similarly: Exercising early, while fair market value is close to the strike price, reduces ordinary income at exercise and converts future appreciation to capital gain. The trade-off is the real dollars paid out of pocket, with the risk that the company—and the stock—fails to perform as hoped.

2. Understand Qualified Small Business Stock (QSBS)

Section 1202 of the Internal Revenue Code offers one of the most powerful tax breaks available to founders and early investors: If you hold stock in a qualifying domestic C corporation (with gross assets historically below $50 million, now increased to $75 million for new grants under the One Big Beautiful Bill Act) for at least five years, you may exclude the greater of 10 times your basis or $10 million of gain from taxation. For new grants, that exclusion can rise to $15 million.²

Some clients go further by “stacking” QSBS exclusions: transferring QSBS-eligible stock to a non-grantor trust (a separate taxpaying entity), which is generally afforded its own exclusion. In some structures, this can push the total excludable gain to $20 million or more. While the IRS has signaled scrutiny of certain stacking strategies this year, they remain a viable planning tool today if done properly.

One related provision is worth noting: If you sell QSBS before meeting the five-year holding period, Section 1045 of the tax code offers a valuable safety valve; you can roll the proceeds into new QSBS within 60 days without triggering immediate tax, effectively preserving your holding period and future exclusion potential.

The key takeaway: Know whether your stock qualifies as QSBS, and explore how to maximize this benefit—including through a Section 1045 rollover—well before a sale.

3. Consider Transferring Equity Out of Your Estate

Basic estate planning principles take on added significance before a liquidity event: If you have assets you do not need, consider giving them away—sooner rather than later, and before their value increases. The benefit of gifting is that it removes both the asset and all future appreciation potential from your taxable estate—a meaningful consideration given that the federal estate tax rate is 40% above certain exemption thresholds, not including estate taxes that some states impose separately. If you hold pre-liquidity stock that is likely to appreciate, transferring shares to a trust for children (or a spousal lifetime access trust, benefiting your spouse as well) can be highly efficient.

Most of these trusts are structured as “grantor trusts” for income tax purposes, meaning that you continue to pay the trust’s income taxes personally. That works in your favor: Because you are footing the tax bill, the trust’s assets can grow undiminished by taxes—effectively an additional tax-free gift to your beneficiaries, on top of your $15 million estate and gift tax exemption (with your spouse able to transfer another $15 million, for a total of $30 million).

For those with significant holdings in appreciated stock, it is also worth understanding how non-grantor trusts can help manage state income tax exposure. For example, a New York resident who establishes a properly structured non-grantor trust—with no New York trustees, no New York property and no New York-source income—may be able to avoid New York State capital gains tax on the trust’s investment gains, which could be a meaningful benefit on a significant liquidity event.

Many clients establish these trusts in states like Delaware, which allow you to separate investment control from trust administration—meaning that you can retain decision-making authority over investments while a trustee handles administration. Delaware trusts can also last for generations, benefiting children, grandchildren and beyond, and offer strong creditor protection and privacy, so beneficiaries need not even be aware of the trust’s existence.

For those who hold equities with relatively low current valuations, a straightforward gift may be simpler than more complex “estate freeze” techniques like GRATs (Grantor Retained Annuity Trusts) or IDGTs (Intentionally Defective Grantor Trusts), since those structures are generally most valuable when transferring appreciated assets while using only a small part of your exemption—a benefit that is less relevant when valuations are still low.

4. Consider Pre-Liquidity Charitable Planning

If philanthropy is among your long-term goals, timing matters. Most people think about charitable giving after a transaction closes, but giving away long-held appreciated stock before a sale, and before you have a binding letter of intent, can be significantly more tax-efficient.

For example, if you own $1 million of stock held for over a year with a $0 basis and later sell it personally, you will owe capital gains tax on the full gain. Instead, donating that stock directly to charity or a donor-advised fund before the sale allows you to avoid capital gains tax entirely, claim an income tax deduction for the fair market value and direct the full $1 million to causes you care about. Rules must be followed carefully: For privately held interests, there can be no binding sale agreement in place, donating debt-encumbered property can result in a partial gain, and a timely qualified appraisal is required—but for those with charitable intent, this can be a tax-savvy way to accomplish multiple goals at once.

5. Assemble Your Advisory Team—and Get Baseline Documents in Order

None of these strategies work in isolation. Tax advisors, trust and estate attorneys, accountants, financial advisors and specialists (from valuation experts to insurance professionals) need to coordinate well in advance of a transaction—ideally months before a deal is signed—since many strategies have strict timing requirements or lose effectiveness once a deal is imminent.

This is also the right time to make sure your baseline planning documents are current: a will or revocable trust—your foundational plan for what happens at death—along with a health care proxy, living will and powers of attorney. These documents matter for both tax and non-tax reasons and are far easier to put in place before, rather than during, a hectic deal process.

The Bottom Line

A liquidity event is one of the most consequential financial moments in an executive’s life—and much of the tax and planning opportunity is only available before the transaction closes. Whether it is an 83(b) election, a QSBS exclusion, a trust transfer or a charitable gift, the common thread is timing: The earlier you engage your advisory team, the more options remain on the table.