The Quiet Return of Liquidity Events in Tech: How Employees Should Prepare in 2026
After several years of stalled IPOs, cautious investors, and frozen secondary markets, liquidity events are beginning to re-emerge across the technology sector. The shift has not been loud or dramatic. There is no repeat of 2021’s hyperactive fundraising environment. However, signs throughout 2024 and 2025 point to a slow but meaningful revival that is likely to accelerate in 2026. Renewed late-stage funding rounds, improving valuations, and increasing pressure on companies to retain senior talent have all contributed to the return of employee-focused liquidity opportunities.
For many employees, the reappearance of tender offers and structured secondary programs are a welcome change after years of watching paper wealth remain inaccessible. Liquidity windows often appear with little notice, and employees who have not prepared ahead of time may find themselves making significant financial decisions with limited time to evaluate their options. Understanding how these events work and how to evaluate them thoughtfully is essential for anyone holding meaningful equity in a private or late-stage company.
The Forces Behind the Return of Liquidity
The recent resurgence of liquidity is tied to several converging trends. Late-stage company valuations, which were deeply compressed in 2022 and early 2023, have stabilized and, in many cases, recovered. This recovery has given investors greater confidence in pricing secondary shares and has encouraged companies to reopen programs that were paused during the downturn.
Private equity and venture funds are also increasingly motivated to return capital to their limited partners. Many funds are now reaching the later stages of their life cycle. Managers are using secondary transactions as a practical way to distribute proceeds before a full liquidity event, such as an IPO or acquisition.
Another important driver is talent retention. Competitive sectors like AI infrastructure, enterprise software, and fintech are once again competing aggressively for top engineering and product talent. Offering liquidity, particularly to long-tenured employees with significant vested equity, has become a tool for keeping critical contributors committed for the next stage of growth.
The Liquidity Pathways Employees May Encounter
Employees in 2026 are likely to encounter one or more forms of liquidity, each with its own dynamics and tax implications. Traditional tender offers remain the most common approach. In these cases, a company or investor syndicate offers to purchase a percentage of employees’ vested shares at a predetermined price. These offers typically occur once a year and often limit sales to a fraction of an employee’s total holdings, which creates both scarcity and urgency.
Structured secondary programs are another option. These are formal liquidity windows coordinated by the company. They may provide a bit more flexibility but still follow company-set rules about timing, eligibility, and transaction size. Venture capital or private equity firms sometimes initiate direct secondary purchases as well, usually targeted at senior employees or early hires whose equity positions play a meaningful role in governance or the overall cap table.
Acquisition-related liquidity is becoming more common too, especially as consolidation increases in AI, cybersecurity, and fintech. Depending on the deal structure, employees may have the option or the obligation to sell a portion of their shares. Finally, companies preparing for an eventual IPO sometimes run “clean-up” liquidity programs to simplify the cap table before a public filing.
Although these structures differ, they share one common feature. They often unfold quickly. Employees who understand their potential risk and tax exposure and who prepare in advance are in the best position to make sound decisions.
The Costly Mistakes Employees Make During Liquidity Windows
When a liquidity event arrives, many individuals focus on the immediate opportunity rather than the implications. One of the most common missteps is treating the proceeds like a surprise bonus instead of a taxable transaction. Liquidity events involving stock options or RSUs can lead to substantial income recognition, and the timing of sales can push employees into higher tax brackets or trigger additional layers of taxation.
Another frequent oversight involves alternative minimum tax on prior ISO exercises. AMT is created in the year an employee exercises ISOs at a fair market value above the strike price, not in the year the shares are sold. However, a later sale does determine whether that earlier AMT can begin to or continue to be recovered through AMT credits and how the income shows up on the regular tax return. Many employees walk into a tender offer without understanding how much AMT they paid in prior years, how much AMT credit they have, or how the sale will interact with that credit. This makes it difficult to evaluate the true after-tax benefit of liquidity events.
Misjudging concentration risk is also common. Some employees sell too little and remain overly exposed to their employer’s stock. Others sell too much without considering future company growth, their personal financial goals, or their ability to take risk.
The timeline is another challenge. Many tender offers require decisions within a 10 to 20 day window. Without preparation, the complexity of the tax and financial considerations can feel overwhelming. This often causes employees to fall into reactive decision-making rather than strategic planning.
A Framework for Deciding Whether to Sell
Thoughtful preparation begins with evaluating how the liquidity event fits into an individual’s broader financial picture. Concentration risk is often the most important consideration. For employees whose net worth is heavily tied to their employer’s stock, selling a portion during a liquidity window can be a prudent way to reduce exposure and create diversification.
Employees should also think carefully about their liquidity needs over the next one to three years. Expenses related to a home purchase, family planning, education, or financial independence should dictate at what percentage of your vested shares you participate in the offer. Understanding the company’s trajectory also matters. Revenue growth, valuation trends, and upcoming fundraising milestones all provide context for whether a partial sale is appropriate or whether holding might provide additional upside.
Tax planning is another essential dimension. The distinction between short-term and long-term capital gains, the potential for exercising more ISOs or recouping AMT credits, the interaction with RSU income, and state-specific tax considerations can all meaningfully affect the net outcome. Finally, employees should reflect on their career timeline. Those who expect to leave the company within a year or two may have fewer opportunities to monetize their equity in the future.
Tax Considerations Employees Should Address Early
Liquidity events often create complex tax outcomes, and employees who prepare early have a significant advantage. ISO exercises from prior years may trigger AMT, especially if the fair market value at the time of exercise is meaningfully lower than the current sale price. For NSOs, the spread between the strike price and the fair market value is taxed as ordinary income, which can significantly increase taxable income for the year, even without a liquidity situation.
RSUs add another layer of complexity. When RSUs vest during a tender offer period, the value of those shares is treated as ordinary income and increases taxable income for the year. If employees also sell other shares during the same window, the combined income can push them into higher tax brackets. Recently vested RSUs usually generate little or no additional gain when sold in a tender offer, but the timing still matters. State residency, especially for individuals who have moved between states, can also influence the overall tax nuances or complexity.
Employees who evaluate these issues before a liquidity window opens can plan accordingly. This may include setting aside proceeds for taxes, adjusting withholding, or coordinating deductions and charitable strategies to offset income.
How Employees Can Prepare Ahead of Time
The employees who benefit most from liquidity are those who begin preparing well before opportunities arise. Modeling the tax impact of potential exercises and sales is an essential first step, particularly for anyone holding ISOs and NSO grants. Early modeling helps employees determine whether to minimize future AMT exposure, hold shares for long-term capital gains treatment, or even preserve potential QSBS eligibility for a partial or full capital gains exclusion. These choices can significantly influence the after-tax outcome of a tender offer or secondary sale. Preparing early also reduces the emotional weight of a fast-moving liquidity window and ensures that decisions support long-term financial goals rather than short-term reactions.
A thoughtful liquidity strategy also considers how proceeds will fit into an employee’s broader financial plan. Many individuals use liquidity to rebalance into a more diversified investment portfolio, build emergency reserves, accelerate a home purchase, fund philanthropic goals, or advance major life priorities such as financial independence or a sabbatical. Employees who take time to evaluate their objectives, ability to take risk, and tax profile are well-positioned to turn a brief liquidity window into meaningful progress toward long-term prosperity.
Final Thoughts
Liquidity events are likely to become more common across the technology sector throughout 2026 as companies gain financial strength, investors seek partial exits, and firms look for ways to retain key contributors. These windows offer meaningful opportunities for employees, but they also carry financial and tax complexities that require thoughtful planning.
Individuals who prepare early by understanding their equity, modeling potential outcomes, and clarifying their long-term goals are best positioned to make confident decisions when an offer arises. A well-executed liquidity event can reduce risk, unlock financial flexibility, and create lasting stability long before a company reaches a traditional IPO or acquisition.
About The Author
Jirayr Kembikian, CFP® is a wealth advisor, managing director and co-founder of Citrine Capital, a San Francisco-based wealth management and tax preparation firm serving tech professionals, founders, and business owners. He specializes in navigating the complexities of equity compensation, private investments, and Bitcoin wealth strategies. With over a decade of experience guiding clients through liquidity events and complex financial decisions, Jirayr brings a grounded yet forward-thinking perspective to building and preserving wealth.