Dashed IPO plans are shifting conversations around equity compensation

When new hires are offered equity in a startup company, it’s sometimes compared to a lottery ticket.

Should the company go public, the employee has a chance to get rich off the shares they were offered when they joined—especially if they got in early. Workers at companies like Meta and Airbnb, for instance, have seen their wealth skyrocket following initial public offerings (IPOs) thanks to equity.

These days, the chance of winning the equity lottery looks much slimmer, though, as companies are taking longer to reach the IPO stage. While analysts expected to see the IPO market pick up this year, the Trump administration’s tariff policies have dashed those hopes. Companies that expected to go public in 2025, such as Klarna and StubHub, recently paused those plans.

Delayed IPO timelines raise questions for employees who receive equity as part of their compensation, and hope to one day realize the value of those shares. To retain these workers, HR teams should prioritize transparency, and consider letting employees sell their shares to investors outside the company, experts told HR Brew.

Why employers offer equity—and how workers view it today. Equity is a common feature of compensation packages at private startup companies, and can be a recruiting tool, as it holds the potential to become real wealth down the road. But it’s also framed as a way to foster a sense of ownership among the workforce, particularly when early-stage startups offer it as a benefit.

“What we require is an ownership mindset, and what we want to do is really recognize that as the company continues to grow, we want employees to be able to share in that upside,” said Justin Angsuwat, chief people officer with Culture Amp. The HR tech firm isn’t public, but new hires are offered stock options, and can receive additional equity the longer they stay with the company (known as a “refresher”).

Part of the idea of offering employees equity, Angsuwat said, is to “help reward them for the upside of the future that they’re creating.”

The future, of course, is never certain, and because fewer companies are going public today, employees “might care a lot less” about their equity packages, said Peter Walker, senior director of insights for Carta, a private capital management software firm. Just 176 companies went public in 2024, compared to 416 in 2021, according to consulting firm EY. While deals have picked up in the years since, factors like “trade policy, market volatility, inflation, and the resilience of the consumer” may impede progress, EY noted.

How HR can approach equity if an IPO stalls. As companies stay private for longer, HR teams are presenting their benefits more holistically, highlighting the strength of offerings beyond equity, such as retirement or healthcare plans, said Kate Winget, chief revenue officer with Morgan Stanley at Work, a financial benefits provider.

Increasingly, some businesses are also exploring new ways to “create liquidity events” so their employees can realize the value of their shares while they remain private, Winget added. One such example is a tender offer, which allows employees to sell their shares on the secondary market.

Companies like Stripe and SpaceX have executed tender offers in recent months, while the financial tech firm Plaid is currently raising money for one. These deals are typically limited to bigger, later-stage companies, but Walker said he believed HR teams could see tender offers as a retention and recruitment tool.

A tender offer, he explained, “allows that employee, allows that candidate to really know, ‘Hey, this is a company that has thought deeply about what equity means.’”

Equity honesty. No matter what the IPO market looks like, HR leaders with private companies offering equity should always be transparent about the potential financial outcomes of this benefit, sources told HR Brew. Employees have little control over the financial events that can turn their equity into cash—such as a merger, acquisition, or IPO—but that doesn’t mean they should be kept in the dark.

“One of the learnings from other companies that I think many of us have gone through during the boom era is like, do not promise that you’re going to go public,” Angsuwat said. He added Culture Amp tries to be “really transparent about where we are on our journey,” and spends time educating employees about how their equity works.

At private firms, “where you know the market is going to be talking about the company,” it’s important to foster “a culture of over-communication and transparency,” Winget said. “If things are shifting,” as has been the case for businesses over the last 18–24 months, “you can’t let months or weeks go by, because it does create a sense of nervousness for employees.”

Offering high-level updates is one way employers can try to retain employees with equity in the company, Winget added.