It is no secret that companies are staying private longer. The trend has been well documented for years. But the numbers keep getting more extreme, and the financial implications for employees holding equity in these companies are becoming harder to ignore.
In the mid-2000s, the median company went public roughly eight years after being founded. By 2018, that number had climbed to ten. In 2025, it was thirteen. Nearly half of today’s US unicorns (private companies valued at $1B or more) raised their first round of venture capital in 2016 or earlier. They have been around for a decade or more and still have not gone public. The exit that employees have been waiting for keeps getting pushed further out.
None of this is happening in a vacuum. The abundance of private capital, the regulatory burden of being public, and the rising bar for IPO readiness have all contributed to a market where staying private is not just viable, it is often preferred. For venture-backed companies and their investors, their reasoning may make sense. But for the employees who hold equity in these companies, the consequences are far more personal.
Equity Compensation Was Not Designed for This
Most equity compensation programs were built around the assumption that a liquidity event (an IPO, acquisition, or a secondary sale) would arrive within a reasonable timeframe. Stock options typically carry a ten-year expiration window. RSU vesting schedules are structured over four to five years. The implicit promise embedded in these programs is that your equity will become liquid, and relatively soon.
When a company stays private for thirteen, fifteen, or even twenty years, that assumption breaks down. Stock options can expire before a liquidity event ever materializes, forcing employees into an uncomfortable decision: exercise and pay taxes on illiquid shares, or let the options lapse and walk away from value they were promised. RSUs may vest and trigger ordinary income tax obligations while the underlying shares remain locked up, with no ability to sell. For employees who joined in the early or middle stages of a company’s life, their equity can quietly become the single largest asset on their personal balance sheet, and one they cannot touch.
This is not a theoretical problem. It is playing out in real time across hundreds of late-stage private companies, from enterprise software firms to biotech to fintech. Employees are sitting on paper wealth that may be significant, but that wealth carries real tax exposure, real concentration risk, and real uncertainty about when or whether it will ever convert to cash.
The Tender Offer Is Not the Planning Event
In response to the IPO drought, tender offers have become the primary liquidity mechanism for late-stage private companies, and the appetite for liquidity has grown dramatically. In Q1 2021, eligible sellers in the median tender offer administered by Carta were willing to meet about 74% of buyer demand. By the first half of 2025, that figure was 99.9%. When the window opens, people are selling.
But a tender offer is not a planning event. It is an execution event. By the time the company sends the email announcing a tender window, employees typically have a limited number of days to decide how much to sell, and the tax and financial planning implications of that decision are already largely baked in. Whether someone holds incentive stock options or non-qualified stock options, whether they have triggered AMT in prior years, whether their equity qualifies for long-term capital gains treatment – these are not questions to answer on a deadline. They are questions that should have been addressed months or years earlier.
The Cost of Waiting
The most common pattern among employees with meaningful equity positions is inaction. Not because they are indifferent to the value at stake, but because the complexity feels overwhelming and the timeline feels uncertain. When there is no IPO on the horizon and no tender offer in hand, it is easy to tell yourself there is nothing to do yet.
That instinct is understandable. It is also often costly. Many of the most impactful planning strategies require time to implement: early exercising incentive stock options to start the clock on QSBS or long-term capital gains treatment, managing AMT exposure across tax years, diversifying around a concentrated position, or simply stress-testing what a range of exit outcomes would mean for your financial picture. They are not strategies that can be deployed in the thirty days between a tender offer announcement and its close.
The irony is that the longer a company stays private, the more important proactive planning becomes, and the more time employees have to do it. Yet in practice, the opposite tends to happen. The absence of a near-term catalyst creates a false sense of comfort, and by the time the catalyst arrives, the window for meaningful planning has narrowed considerably.
What Employees and Equity Holders Should Be Thinking About Now
At a minimum, employees holding meaningful equity positions should understand precisely what they own: the grant type, the vesting schedule, any expiration dates, the current 409A valuation, and the tax treatment that will apply at exercise, vesting, and eventual sale. They should have a clear picture of how concentrated their overall wealth is in a single company and how that concentration compares to the rest of their financial life. And they should be modeling different scenarios: what happens if the company goes public at a premium? What happens if it is acquired at a discount? What happens if neither event occurs for another five years?
Conclusion
The venture-backed economy has produced extraordinary wealth for founders, investors, and employees alike, but the rules of the game have changed. Companies are staying private longer, liquidity windows are less predictable, and the decisions employees make, or fail to make, during the long private years carry compounding consequences.
The best time to build a plan around your equity is not when you get the tender offer email or the IPO memo, it’s now. Know what you are going to do before the window finally opens so you don’t have to scramble when it does.
