Pattern IPO: What Employees Need to Know About Their Equity Compensation (Updated Post-IPO)

Pattern Group (NASDAQ: PTRN) is now a public company. On September 19, 2025, Pattern made its Nasdaq debut, raising approximately $300 million via an IPO. The shares were priced at $14, and the trading opened at about $13.50, giving Pattern a valuation of roughly $2.38 billion.

If you hold RSUs, stock options, or early shares at Pattern, the IPO changes a lot of what you need to plan for: tax, liquidity, lockups, and more. This article walks through what just happened, what it means for employees, and how to make solid plans now that Pattern is public.

Here’s a summary of key IPO facts:

The IPO alters the landscape significantly. Below are the expectations for employees, what has changed, and what to plan for.

If you hold options, many of the pre-IPO models still apply, but there are new dynamics:

• Exercising options: Now that PTRN shares are publicly traded, you can actually exercise and hold or sell in the market (after lockup) rather than waiting for a liquidity event.
• Stock price benchmarks: Strike vs current market value is easier to observe. Timing matters.

Example: Suppose you have 20,000 ISOs at a $2 strike price:

• At IPO, market is $14, so spread = ($14 − $2) × 20,000 = $240,000
• If you exercise now, that $240,000 goes into your AMT income in the tax year of exercise.
• If you hold your shares long enough (2 years from grant, and 1 year from exercise), any gain above $14 (say you later sell at $20) could be taxed at long-term capital gains rates.
• For NSOs, the situation is similar, but you’ll owe ordinary income tax at the moment of exercise (spread), plus payroll/cart state taxes, etc.

Pattern likely has RSUs that were subject to liquidity event triggers (pre-IPO). Now that the IPO event has occurred:

• RSUs that had liquidity event conditions tied to “IPO or similar” can vest (if they satisfy other conditions, like service period).
• At vesting, shares are public shares (once issued), and then ordinary income tax is due based on the value at vesting.

Example: Suppose you hold 50,000 RSUs, vesting now that the IPO has occurred, and the closing/opening price is ~$14:

• Value = 50,000 × $14 = $700,000
• If your Federal effective tax rate is, let’s say, 30%, you may owe around $210,000 in just Federal taxes. If withholding is only ~22%, Pattern likely withholds ~$154,000, leaving you with a $56,000 shortfall. Employees must plan for that.

If you early-exercised options in Pattern when it was private (grant date early, low valuation) and have held those shares through the required periods, you may qualify for Qualified Small Business Stock (QSBS) benefits. However, note that the IPO price of approximately $14 suggests Pattern has exceeded the qualification thresholds, making only early participants likely to be eligible.

Be sure your documents reflect QSBS-eligible shares (proper grant, corporate form, etc.).

• Lockups: Most employees will be subject to lockup agreements. Pattern’s prospectus indicates ~180-day lockup for insiders. During this period, you can't sell your shares.
• Valuation volatility: Opening at ~$13.50 (below the $14 offer price) indicates that the public market can adjust the price. The open price sets market perception. Holding long can lead to gains or losses.
• Liquidity planning: Once the lockup expires, most employees will get their first chance to sell publicly. Decide in advance if to sell enough to cover taxes, diversify, etc.

• For every grant: note grant date, strike (if options), RSU quantities, vesting schedule, and any liquidity or IPO triggers.
• Check which RSUs/options have already vested or will vest due to the IPO.

• Model your tax exposure in the year of IPO/vesting. Include federal, state, any AMT (for ISOs), and payroll taxes if NSOs.
• Estimate withholding. It is often conservative, so plan to set aside extra cash.

• For ISOs: consider exercise timing vs AMT exposure and your outlook.
• For NSOs: be cautious due to immediate ordinary income at exercise.

Many employees will see a large portion of their net worth tied to PTRN shares. That’s risk.

Staged Sale Strategy Example:

• Sell enough shares at lockup expiration to cover all your tax exposure and initial capital recovery.
• Hold some shares for long-term upside if the stock continues to appreciate.
• Diversify by moving out of stock into a more balanced portfolio gradually.

• Consider donating appreciated shares (to a DAF or charity) to reduce gains/tax.
• If eligible, QSBS planning: keep records, confirm eligibility, and consult counsel.

• Stock might drop below IPO price. Plan for that risk.
• Be prepared for tax bills even in years when you don’t sell (RSU vesting or exercises can trigger liability).

You hold 10,000 RSUs that vest when Pattern goes public. IPO price = $14/share, so your taxable income = $140,000.

Two possible outcomes:

• If Social Security applies: Total withheld = $48,510. Tax due = $49,000 → Gap = $490 out of pocket
• If Social Security cap already met: Total withheld = $39,830. Tax due = $49,000 → Gap = $9,170 out of pocket

You have 5,000 ISOs with a $2 strike price.

• You exercised early when private at FMV = $2.00 → no AMT at that time.
• QSBS 5-year clock (if eligible) started at early exercise.
• IPO price = $14, later rises to $20. Tax event occurs when you sell.

If you sell after qualifying disposition rules (2 years from grant, 1 year from exercise): basis $2, sale $20, gain $90,000 → long-term capital gain (~20% + 3.8% NIIT).

Suppose you hold 20,000 shares post-IPO. At lockup expiration, the stock opens at $13.50.

• Sell 8,000 shares (40%) to cover taxes and recover capital.
• Hold 6,000 (30%) for potential long-term gains.
• Retain 6,000 (30%) as a longer-term bet while diversifying.

• Audit your grants — RSUs, options, vesting, QSBS eligibility.
• Model taxes now — federal, state, AMT, payroll.
• Plan a sales strategy ahead of lockup expiration.
• Set aside cash for withholding gaps.
• Consult with an expert for ISO, cross-border, or QSBS issues.