SpaceX IPO Brings ‘Prime Time’ for Advisers Ahead of Wealth Surge

Outside a SpaceX facility in Hawthorne, California. Photo by Mario Tama /Photographer: Mario Tama/Getty I

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(Bloomberg) — If SpaceX’s IPO goes off as planned, it’ll be a pivotal moment for many of the company’s thousands of employees, who’ll finally be able to sell shares into the public market.

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That prospect has created a groundswell of business for wealth advisers who specialize in dealing with the sort of complex equity compensation favored by tech startups, as well as the massive tax bills that are likely to follow.

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“We’ve been working 10-, 12-hour days, even on weekends,” said Frank Alvarez, a consultant with San Diego-based Tidemark Financial Partners, who has about two-dozen SpaceX employees as clients. “The tension, and the energy, is being felt throughout the office. It’s prime time right now.”

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Some of that tension is also being felt by their clients, advisers say. Along with the anticipation of a life-changing windfall, the initial public offering is eliciting more complicated emotions, as well, ranging from apprehension to confusion.

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“I wouldn’t say it’s quite like being a lottery winner, but with sudden wealth, with newfound wealth, it’s a different mindset,” said Angela Dorsey, a financial planner based near SpaceX’s Hawthorne, California, offices who works with multiple clients from the company. “They are excited about it, but once the initial excitement passes, fear seeps in.”

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Some employees in their 20s and 30s are having a hard time wrapping their head around the need to set up exotic-sounding estate-planning tools they didn’t think they’d have to worry about for another few decades, wealth managers say.

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“You’re talking to this 37-year-old about GRATs, about SLATs, about irrevocable living trusts, and they’re like, ‘I’ve never heard of this in my life,” said Alvarez, who averages a dozen or so meetings a week with SpaceX employees. “They say, ‘I have a 1-year-old kid at home. What are you talking about?’”

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‘Different Beast’

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SpaceX has more than 22,000 full-time employees globally, some of whom have worked there since its founding 24 years ago, and others who joined after Elon Musk merged the rocket company with his xAI artificial intelligence and social media business in February. SpaceX is gearing up to go public as early as next week, with Musk targeting a valuation of nearly $1.8 trillion.

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The company’s S-1 filing last month said it places a “heavy emphasis on equity compensation,” but didn’t specify how many employees are included in the program. SpaceX in 2024 set aside more than 365 million shares for employees, directors and consultants as part of their future pay.

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The company will reserve up to 5% of stock in the IPO for certain employees, as well as friends and family of its executive officers, SpaceX said Monday in an amended filing. It plans to sell shares at $135 apiece in the public offering, the firm said Wednesday.