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    Will My Company be Acquired or Go Public?

    Originally published at MassBioHQ on October 24, 2018

    New Rules Allow For 5-Year Tax Deferral on Stock Option and RSU Exercise for Privately Held Companies

    Many of my clients who work for privately held life sciences companies receive non-qualified stock options (NQSOs) and restricted stock units (RSUs) as part of their compensation packages. These are great tools for building wealth.

    However, as with all forms of equity compensation, you need to be aware of the tax ramifications. The good news when it comes to NQSOs and RSUs is that, thanks to last year’s Tax Cuts & Jobs Act, you can now defer taxes on the exercise of these investments for up to five years.

    4 Financial Planning Tips for Managing Concentrated Stock Positions

    Over the past ten years, pharma and biotechnology companies have increased their reliance on performance-based awards and RSUs. As a result, employees from mid management to C-suite levels often end up owning highly concentrated stock positions. 

    If you own a concentrated stock position, consider these tips to help manage risk and ensure you remain on track to meet your financial goals:

    Exercising Your ISOs in the New Tax Environment

    Biotechnology and pharma stocks had a great run this summer, so now may be a good time to look at your incentive stock options (ISOs) and how recent changes in the calculation of the Alternative Minimum Tax (AMT) may benefit you.

    Let’s start by examining what happens when you exercise an ISO.

    Understanding How Equity Compensation Fits Within Your Overall Financial Plan

    The role and makeup of equity compensation programs within the life sciences industry continues to evolve. Stock grants and stock options remain key components within many employers’ compensation packages. The primary challenge for many life sciences professionals is how to integrate equity compensation into their overall financial plan.

    Read on to learn about a few tips that may help you make smart decisions.

    Which Is The Best Choice For You—Restricted Stock or Incentive Stock Options?

    If you are starting a new position within the life sciences industry, the best time to negotiate your compensation package is before you sign on the dotted line. In most cases, your package will include some form of equity compensation, such as restricted stock or incentive stock options (ISOs).

    One frequent question I hear from my clients is whether it’s better to ask for restricted stock grants or ISOs. While fewer companies are willing to offer a choice, if you do have the option of negotiating your equity compensation package, the answer to this question will depend on your financial goals, tolerance for risk, and investment time horizon.

    How Recent Tax Law Changes May Affect Your Equity Compensation Benefits

    The U.S. tax code is always evolving, and the Tax Cuts and Jobs Act of 2017 made significant changes that will affect anyone who earns equity compensation. Read more for a few highlights from this new law.

    Investing Perspectives From Leo Tolstoy

    Leo Tolstoy, one of the greatest Russian writers of all time, is no stranger to someone like me who grew up in Eastern Europe. I became immersed in Tolstoy’s novel, Anna Karenina, at a fairly early age.

    However, I was surprised to learn about his writings on non-violence that influenced such noted figures as Mahatma Gandhi and Martin Luther King, Jr. and I definitely didn’t expect to hear Tolstoy quoted during a recent yoga class in Boston: “The two most powerful warriors are patience and time.”  

    Tax Cuts and Jobs Act of 2017: What Taxpayers Need to Know

    On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act of 2017 (the act or TCJA). The legislation makes significant changes to the Internal Revenue Code (IRC), including individual, corporate, and gift and estate taxation.

    Under the TCJA, the changes that affect individual income tax are in effect only for tax years 2018−2025. Read the full blog to learn more about the modified changes and how this may effect your taxes.

    4 Ways to Maximize Your Equity Compensation Package During Times of Transition

    Thinking about making the jump to a new employer? Is your company being acquired or merging with another company? To help protect and maximize your equity compensation package, be sure to have a solid negotiating strategy in place.

    In my experiences serving life sciences professionals, I have seen clients leave money on the table when they switched to a new job or their company experienced a merger or acquisition. Here are four ways to help you avoid this and negotiate a good deal.

    Your Company Stock as Part of Your Retirement Planning Strategy

    The U.S. stock market has been on the rise for more than eight years and healthcare stocks—including many life sciences companies—have participated in this rally. In fact, year-to-date, healthcare is the second best performing sector within the S&P 500 Index.

    While this is great news if you own these stocks, you may be wondering, “How long can this last?” The short answer is that nobody knows. Trying to predict the future direction of the stock market is futile.

    But there is one thing we do know, and that is that the economy and the stock market are cyclical. Periods of strong economic growth are followed by recessions. Bear markets follow bull markets. The only question is when the pendulum will swing the other way.

    If a large portion of your personal wealth is tied to the fortunes of your company’s stock, you need to be prepared for a potential downturn - especially if these assets are part of your overall savings strategy for your retirement. 

    Here are five ways you can diversify your portfolio and earmark your equity compensation for your retirement goal.