Case Study: Huntress avoids the tender offer tax trap with Secfi

Huntress saves up to $1.09M on tender offer taxes with Secfi

Huntress is a pre-IPO cybersecurity company valued at $1.55 billion whose employees faced a significant financial challenge. When a liquidity event like a tender offer arises, the default option for employees selling Incentive Stock Options (ISOs) is a cashless exercise, which is simple but results in the entire gain being taxed at high ordinary income rates. Secfi analyzed this scenario, highlighting the substantial tax trap that could cost employees hundreds of thousands of dollars.

Secfi provided a strategic solution through financial planning and specialized financing. By illustrating an alternative path where an employee exercises their options early and holds the shares to qualify for lower long-term capital gains taxes, Secfi demonstrated potential savings of nearly $300,000. For employees needing upfront cash for exercise costs and associated taxes, Secfi offers non-recourse financing, enabling them to pursue this tax-efficient strategy. The analysis showed that with this planning, an employee could increase their net proceeds significantly, with potential gains exceeding $1 million if the company's share price appreciates.

Huntress