I’ve worked for private companies that were trying to IPO, and seen it go well and poorly.
They tend to give enployees RSOs or “phantom” stock as incentives. The thing you have to understand is that, until the company is valuated and the IPO process starts, that shit is Monopoly money - they can change it, revalue it, or whatever at the drop of a hat.
If they do IPO, that stuff turns into real stock, but there are blackout periods and quiet periods by SEC rules.
If they’re angling for a LBO or something, generally the Monopoly money either instavests or goes away, based on however the buyout is negotiated, but (I believe) it has to turn into real money at that point, and can’t remain an unfunded liability (I could be wrong on that).
That’s not exactly what you asked, but is peripherally related.