Anduril Employees: You Can Sell Stock Until November 9. Should You?

If you work at Anduril, you probably already got the email.

The company opened a tender offer on October 13 that lets employees sell shares at $94.80 each. The total is capped at about $1.3 billion, and it puts Anduril's value near $90 billion. Back in May, the company raised money at $61 billion. That's a big jump in five months.

The window closes November 9. So you have a few weeks to decide how much, if any, to sell. I'd use them.

Start with one question

Forget the valuation for a second and ask yourself this: if someone handed you the cash value of your vested shares today, would you turn around and buy that much Anduril stock at $94.80?

Most people say no. Not because they doubt the company, but because putting most of their net worth into one private stock they can't sell whenever they want isn't something they'd choose on purpose. They just ended up there because of how they got paid.

If your honest answer is no, that's a reason to sell some.

Selling part of your shares isn't a bet against Anduril. You keep the rest, and if the next round comes in at $100 billion or more, you still benefit. What you're buying with a partial sale is options: a down payment, paying off debt, a real emergency fund, or just not having everything ride on one outcome.

The mistake I'd try hardest to avoid is selling nothing because the price might go up, then watching the next tender get delayed for two years.

Your tax bill depends on what you actually own

This is where people get surprised. Two coworkers can sell the same number of shares at the same price and owe very different amounts.

• Shares you've held more than a year: usually taxed as long-term capital gains, the best rate you'll get.

• Non-qualified stock options: if you exercise and sell in the tender, the gain is generally taxed as ordinary income, just like salary.

• Incentive stock options (ISOs): exercising and selling in the same year usually means ordinary income too, though it also avoids the AMT headache that comes with exercising and holding.

• RSUs: if your units settle as part of the sale, the value is typically taxed as wages.

One more thing to think about: If the tender price is higher than the company's official fair market value for its stock, the IRS can treat some of that difference as compensation instead of a capital gain. Your tender documents should explain how Anduril is handling it. If they don't, ask.

Watch the withholding

When a sale is taxed as wages, the company usually withholds federal tax at a flat 22% on the first $1 million. That sounds fine until you remember that plenty of engineers earning well into six figures are already in the 32% or 35% bracket, and the sale pushes them higher.

Say you sell $200,000 of stock and it's taxed as income. About $44,000 gets withheld for federal tax. If your actual rate on that money is 35%, you really owe around $70,000. That's a $26,000 surprise in April, before state tax.

The fix is simple, but you have to do it on purpose. Set aside more than what's withheld, and talk to your CPA about a fourth-quarter estimated payment, due January 15. Paying at least 110% of last year's tax through withholding and estimates generally keeps you clear of underpayment penalties if your income is over $150,000.

Also keep in mind that tenders can be oversubscribed. If more people want to sell than the $1.3 billion cap allows, you may only get to sell part of what you asked for. Don't spend the money until it lands.

If you already left Anduril, check your email

Former employees are eligible this time too, and for the first time the offer covers people in 16 countries instead of just the U.S., U.K., and Australia.

If you left a while ago, the notice may have gone to an old personal address or landed in spam. It's worth logging into your equity account to see whether you have shares or options that qualify. For former employees especially, a tender like this might be the only chance to sell for a long time.

A few other things to look for in the paperwork: how many of your shares are eligible, whether there's a per-person limit, how options get exercised as part of the sale, and exactly when the cash shows up.

The short version

You don't have to sell. You also don't have to keep everything. Most people land somewhere in between, and that's usually the right call.

Figure out what the money is for, know how your shares will be taxed, set aside more than the withholding, and make your decision before the deadline sneaks up on you. November 9 will come faster than it seems.

I'm Michael Walstedt, a fee-only wealth advisor at Reliant Wealth Advisory in Hoboken, NJ. I work with tech employees on equity compensation decisions like this one. If you have questions about your situation, click here to book a call or find some availability below:

This article is for educational purposes only and is not tax, legal, or investment advice. Details of the Anduril tender are based on public reports and may differ from the official offer documents. Talk to a qualified tax professional about your situation.