Flock Safety IPO: What employees need to know about their stock options

Your equity could be one of the most valuable parts of your compensation — or one of the easiest to lose out on.

With Flock Safety’s recent $7.5 billion valuation¹ and IPO speculation on the rise, your stock options may represent a significant financial opportunity. But without a plan, that opportunity can quickly turn into a costly tax surprise.

💡 The decisions you make now could determine how much of your equity you actually get to keep.

Exercising your options early could help you:

✅ Reduce your tax burden

✅ Maximize your post-tax gains

✅ Gain financial flexibility before and after an IPO

So, don’t leave it to chance.

If the company’s valuation continues to climb, so could your tax bill. Now is the time to understand your options—and take control of your outcome.

Let’s break down what Flock employees need to know to make the most of their equity before a liquidity event.

What happens when Flock Safety files for an IPO?

In the lead-up to an IPO, a company’s 409A valuation often rises—and that can have a major impact on your stock options. The 409A sets the Fair Market Value (FMV) of your shares, which determines the tax implications when you exercise.

As the FMV increases:

💸 Exercising your options becomes more expensive.

🧾 Your potential total tax bill increases.

🕒 Waiting too long could limit your ability to plan strategically.

If Flock Safety goes public, your ability to sell shares may also be subject to a lock-up period, often lasting six months or more. That means you’ll want to have a plan in place well before the IPO to avoid being caught off guard.

💡 Now is the time to consider exercising—while the FMV is still relatively low.

Understanding the value of your Flock Safety stock

After Flock’s recent 10:1 stock split, we’re assuming the company’s latest 409A valuation (FMV) is approximately $6.77 per share.

📌 Quick refresher: A stock split increases the number of shares you hold while proportionally reducing the price per share—without changing the total value of your equity. So if you had 10,000 options before the split, you’d now have 100,000 at one-tenth the price.

If you have stock options, your strike price was set when your options were granted—and that number doesn’t change (other than being adjusted for the split).

But here’s what does change: the FMV of your shares. And that can have a big impact on your taxes.

📌 Here’s why this matters:

When you exercise, you may owe taxes on the spread—that’s the difference between your strike price and the FMV.

As Flock’s 409A valuation increases, so does that spread—and your potential tax bill.

Waiting to exercise until right before or after an IPO could mean facing a much higher tax burden than if you exercised earlier.

💡 Exercising when the FMV is lower can help reduce your tax bill and total exercise costs.

Scenario: a Flock Safety employee who joined in 2021

Imagine you’re a Flock Safety employee with 100,000 vested Incentive Stock Options (ISOs). Exercising now could save you $320,000 in taxes—that’s money you could keep and use towards a downpayment, a big trip you’ve been holding off on, etc., instead of handing it over to the IRS.

Let’s break it down. Here are some of the assumptions we’re using for this example:

For this case study, we’re also assuming the employee is able to sell their shares at $22.50 per share—a 50% premium to Flock’s most recent preferred price of $14.77. That’s not a guaranteed IPO price, but it’s a reasonable estimate based on how many high-growth companies are priced relative to their last funding round. The actual price could be higher or lower depending on market conditions.

💡 Want to see how things change at a different exit price? You can sign up for Secfi’s tools and run your own personalized scenarios using your actual strike price, number of options, and estimated sale price.

Assuming the FMV continues rising in the lead-up to an IPO, employees who exercise now can establish a lower cost basis and potentially qualify for long-term capital gains tax treatment—reducing their future tax burden. On the other hand, waiting until the IPO to do a cashless exercise could result in significantly higher ordinary income taxes on the difference between the FMV and the strike price.

Let’s compare what our example employee’s outcome could look like if they exercised now versus waiting until after the IPO. We’re assuming they have a $250,000 income, live in California, and are married filing jointly.

Exercise early or wait for the IPO?

If this employee exercises now, they could increase their net gain by $320,000 in potential tax savings.

Let’s explore some features of each option:

Option 1: exercising early (before the IPO)

• Potentially lower tax burden. Exercising at the current FMV ($6.77) may reduce taxable income.
• Long-term capital gains eligibility. Holding shares for at least a year after exercising may qualify them for lower tax rates.
• More control over liquidity. Exercising early provides flexibility before potential trading restrictions post-IPO.
  

Option 2: waiting until after the IPO

• No upfront exercise cost—But higher potential taxes later.
• Stock price uncertainty—Market conditions could change post-IPO.
• Ordinary income tax applies—Higher tax rates than long-term capital gains.

🔎 Key takeaways:

• Exercising early may result in a significantly higher post-tax gain ($1.43M vs $1.11M).
• Waiting until the IPO leads to a higher tax burden due to ordinary income tax treatment.
• If Flock’s valuation continues to rise, waiting to exercise could lead to an even larger tax bill.

Market trends & why timing matters

The last 3–4 years have been a rollercoaster for private company valuations, shaped by shifting market conditions, investor sentiment, and public market volatility. These fluctuations have directly impacted secondary market pricing, offering insight into how companies like Flock are valued ahead of a potential IPO.

📈 Key trends shaping Flock’s stock value:

• 409A valuations have been trending upward, signaling increased investor confidence.
• Secondary market activity suggests strong investor demand.

💡 If trends continue, waiting to exercise could result in a higher FMV—and higher taxes.

How Secfi can help

For many Flock Safety employees, the biggest barrier to exercising early is the upfront cost. That’s where Secfi’s non-recourse financing comes in:

✔ Exercise now—without tying up personal cash.

✔ If your stock doesn’t increase in value, you owe us nothing.

✔ Avoid AMT surprises with a personalized strategy.

What's your next move?

Flock Safety’s growth shows no signs of slowing down, and when the company eventually goes public, things could move quickly. Making a plan now ensures you’re ready when the time comes—whether that means exercising early, understanding your tax exposure, or preparing for liquidity.

We’re ready to help Flock Safety employees evaluate their options, navigate tax implications, and access financing so they can make the best decision for their equity—before an IPO changes the game.

¹Source