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What can happen to stock grants in corporate mergers, acquisitions, spinoffs, and divestitures?

Browse an overview of this section below, or explore the subtopics to the left.

Find easily understandable explanations of key terms and concepts in Basics. Learn what an M&A deal may mean for your grants in the subsection Impact. Then move on to a comprehensive range of content explaining the tax treatment of stock compensation in M&A.

Test Your Knowledge Test and improve your knowledge with our Mergers & Acquisitions quiz and its study guide in the answer key.

  Articles   FAQs  

NEW! Restricted Stock Units After An Acquisition: Know What Could HappenThis is premium content

Kristin McFarland
When a company is merging or being acquired, many employees are left wondering what will happen to their unvested RSUs. While the outcomes for holders of unvested RSUs and current equity holders will depend on the terms of the M&A deal, if your company is being acquired there are a few things you should know about your restricted stock units and what may happen.

My Company Is Being Acquired: What Happens To My Stock Options? (Part 1)

Richard Lintermans
The terms of your option grants, the terms of the M&A deal, and the valuation of your company's stock all affect the treatment of stock options in M&A. What happens to your unvested options is the main focus of concern.

My Company Is Being Acquired: What Happens To My Stock Options? (Part 2)This is premium content

Richard Lintermans
Your company is being acquired. You worry about losing your job and your valuable stock options. In Part 1 we looked at the importance of your option grant terms. Part 2 examines the acquisition's terms and the valuation of your company.

My Company Is Being Acquired: What Happens To My Stock Options? (Part 3)This is premium content

Richard Lintermans
Part 1 looked at the importance of your option grant terms. Part 2 examined the acquisition's terms and the valuation of your company. Now let's look at the tax treatment.

The Acquisition: All's Well That Ends Well?This is premium content

I was hired by Company X and received equity pay that might have been worth between $300,000 and $400,000 at our IPO. Not bad, except that we never went public.

Understanding The Risks In Your Pre-IPO Stock Options (Part 1)This is premium content

Edwin L. Miller, Jr.
Employees in startup companies often have misconceptions about their stock options and restricted stock. Understand what could happen to your stock options or restricted stock in venture capital financings, in an acquisition, or in an IPO. Part 1 looks at M&A deals; Part 2 analyzes IPOs.

Private Equity Transactions: Understanding Some Fundamental Principles

Jeffrey Blomberg
Business Law Today
If your company is acquired by a private equity firm, your stock compensation will change. For key managers, its importance may increase, though new restrictions may apply.

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What will happen to my vested stock options if my employer is acquired by another company?

Your vested stock options may be handled in any of the following ways in an acquisition, depending on the deal's terms and any limits in your stock plan. For example, they could be rolled over into...

What could happen to my restricted stock in an acquisition of my company?This is premium content

The treatment of the restricted stock (or restricted stock units) in the acquisition or merger depends on various factors. The possible treatment of your unvested shares includes...

UPDATES! What will happen to my unvested stock grants if my company is acquired or if it merges with another company?This is premium content

In a merger or acquisition (considered a change in control), there are many possibilities. Study the terms of the stock plan and any individual grant agreements with special provisions, and examine the way the acquisition is structured. Some companies...

What happens to my ESPP when my company is acquired?This is premium content

Your contribution does not roll over into the buyer's ESPP, and rarely is the target's offering period continued after the deal is closed...

Can an acquisition of my company accelerate the vesting of my stock options?This is premium content

Possibly. Read your grant agreement and the stock plan documents carefully...

How will I know that a change of control has occurred?This is premium content

A change of control is commonly considered a merger and/or acquisition, but it can be...

How do "change of control" and trigger provisions in stock plans generally work to accelerate vesting?This is premium content

Provisions vary according to the terms of your grant and stock plan. These provisions can be triggered when...

What portion of unvested options is normally accelerated in a change of control?This is premium content

Typically, stock option vesting is accelerated in some way in a change of control. Depending on your stock plan...

Once acceleration of vesting has occurred, how long do I have to exercise my newly vested stock options in the seller?This is premium content

First check whether your options will be converted to options in the buyer...

A private equity firm is buying my company. What will happen to my stock options and restricted stock?This is premium content

The vesting of the grant will probably accelerate according to specifics in your stock plan or grant agreement. The grants will probably be cashed out. Depending on your level in the company and the length of your employment, you may receive a meaningful grant in your newly private company that will require you to...

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