If you work at a large private company like Databricks, stock compensation is most likely a major part of your total pay package. Valuations keep climbing, and the excitement (and the stakes) keep going up with them. Databricks closed a $5 billion funding round in August 2026 at a $190 billion valuation, and CEO Ali Ghodsi has been clear that an IPO is coming, just not on any fixed timeline. He's called 2026 a tough year to go public given how crowded the market is, and has pointed to 2027 or later as more realistic.
No one knows exactly when that day arrives. But the planning around your equity should start now, not when the news finally breaks.
Why Single Trigger RSUs Are Different
RSUs (restricted stock units) are a promise to deliver you company shares once certain requirements are met. Once those requirements are met, the shares vest, you officially receive them, and you're taxed on their fair market value at that time.
At most public companies, the requirement is simple: stay long enough (often 4 years) and your RSUs vest on schedule. Private companies typically handle this differently. They often use double trigger RSUs, which require two things to happen before you vest: the time-based requirement, plus a liquidity event like an IPO, acquisition, or tender offer.
Databricks does it differently. It offers single trigger RSUs, meaning only the time-based requirement has to be met. That creates a real problem: you're taxed on these shares as they vest, even though you can't sell them to generate any actual cash. This is often called phantom income, and it raises an obvious question. What happens if you owe tax on money you don't have?
The Tender Offer Workaround
Databricks has tried to solve this by periodically opening tender offers, windows where employees can sell shares internally for cash. The catch is timing. You'll usually only get about a month's notice before a window opens, and it may only happen once a year, if that. If you're not already thinking ahead, you can easily miss the opportunity entirely.
The Tax Problem With Vesting Shares
For employees earning above roughly $300,000 (though this depends on your full picture), RSU vesting can create real tax exposure. When shares vest, tax is owed on the value, but companies typically only withhold 22%, the IRS supplemental income rate. If your actual marginal rate is 32% or higher, that gap can turn into a surprise tax bill at year end that you weren't prepared to write a check for.
Deciding Whether to Participate in a Tender Offer
When a tender offer window opens, the company usually caps how many shares you're allowed to sell. Before deciding whether to sell, look at concentration. If Databricks stock makes up 20% or more of your total investable assets, you're carrying meaningful concentration risk. Diversifying can lower your overall risk while still letting you keep upside exposure through your remaining shares.
Deciding How Much to Sell
Once you've decided to participate, the next question is how much.
- Start with near-term cash needs. If you have a down payment or another short-term goal coming up, that money shouldn't be sitting at risk in a single stock. Take it off the table.
- Set a concentration target. If you want Databricks to make up no more than 30% of your investments, calculate how much you need to sell to get there, and factor in shares that are still scheduled to vest.
Building the Selling Plan
Not all shares are created equal from a tax standpoint. Review your tax lots on Shareworks and understand the consequences before you sell.
- Shares held more than a year may qualify for long-term capital gains treatment, which is often more favorable.
- Newer shares may have a smaller gain between the price at vest and the current fair market value, which can also result in a lower tax bill even without the long-term rate.
The right answer depends on comparing your specific lots, not just picking the first shares available to sell.
Wrapping It Up
Single trigger RSUs create a genuinely exciting opportunity, but they also create a tax and liquidity puzzle that most employees aren't set up to solve on their own. If you're at Databricks or a similar company offering single trigger equity, the time to build your plan is well before the next tender offer window opens, not during the month you find out about it.
Understand your concentration, know your cash needs, and have a lot-level selling strategy ready to go so you're acting on your terms instead of scrambling under a deadline.
