[justrudd]

Depends on the type of options you have. If you have ISO, yeah. I'd probably wait because there are "games" you can play to not impact your total tax bill for the year (i.e. not trigger AMT).

If they are NQSO, the difference between your option price and market price is a taxable event. So if your option price is $1 and the company IPOs and has a price of $12 when you exercise, you owe taxes on $11 per share (this is a gross oversimplification). Now if you had purchased before the company is acquired/goes public, the price might just be $5 so your overall tax bill is lower. You exercise at a lower price and hope the price goes up.