Rethinking RSUs: Navigating Equity Strategy in the Pre-IPO Landscape
The L Suite and Latham & Watkins explore how legal teams can navigate the rise of RSUs in private companies, from secondary participation to key compliance considerations.
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With the median time from first funding to IPO now stretching to 7.5 years for venture-backed companies, traditional equity models are being pushed to their limits. As retention pressures mount and option incentives lose their edge, restricted stock units (RSUs), particularly those with double-trigger structures, are gaining traction across late-stage private tech companies. But with that shift comes a web of legal and tax complexities, especially when RSUs are brought into secondary transactions.
On a recent Latham TECH podcast, “Can RSUs Unlock Employee Equity?”, Seth Gottlieb, Global Vice Chair of Latham’s Technology Industry Group, and fellow Latham partner Ashley Wagner, explore the new frontier of RSU strategy in the private market. From structuring equity plans that can flex with multiple liquidity events to navigating the gray areas of IRS guidance under Section 409A, the conversation surfaces what legal leaders need to know now.
The discussion is compelling in that it offers a nuanced look at how companies can balance flexibility and compliance in their approach to equity, particularly as expectations around liquidity and employee value continue to evolve.
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If you're interested in exploring how other legal leaders are approaching employee equity, liquidity planning, and RSU structuring, The L Suite offers insights and peer connections to guide your strategy. Apply to join today.