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Annotated diagram of Schedule DTax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.


Articles

Restricted Stock Units After An Acquisition: Know What Could Happen This is premium content

Podcast included! 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 2) This is premium content

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.

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

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.
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Private Equity Transactions: Understanding Some Fundamental Principles

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.

FAQs

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...
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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...

NEW! Why do I need to complete IRS Form W-9 when the company where I work is being acquired? This is premium content

It must not be on file with the transfer agent that is handling the share transfer for stock option exercises, restricted stock/RSU vesting, or sales of company shares. To avoid federal withholding at the 28% rate...

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...

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...

Can I protect myself from dilution and liquidity preferences in my pre-IPO company? Why does this matter? This is premium content

During the early stages of a company's existence (e.g. up to the first round of venture financing) you may be able to get...

In an acquisition, what happens to my underwater stock options? This is premium content

This depends on the provisions in your stock plan and the structure of the merger or acquisition. According to the flexibility for adjusting outstanding grants that your company's stock plan provides, the buyer can...

What would happen to my performance shares in an acquisition of my company? This is premium content

For a change in control (e.g. a merger or acquisition), the performance period for measuring whether goal(s) are reached is cut short. Commonly, performance share plans...

What happens to my stock options in a part-cash, part-stock deal? This is premium content

When the consideration paid in the acquisition or merger is a combination of stock and cash, the treatment of outstanding equity grants varies more than it does in all-stock or all-cash transactions. In a business combination, most stock plans require...

According to the terms of the acquisition, all my stock options will be converted to those of the buyer. How do I ascertain the number of options I will have and the exercise price? This is premium content

Options typically convert according to the negotiated values of the target's and the acquirer's stock at the time of acquisition...

My company is selling or spinning off the division where I work. I will no longer work for that company but will keep the same job under the new corporate owner. What will happen to options and restricted stock in the divestiture? This is premium content

Check your stock plan to see whether it addresses this type of divestiture (or spinoff), in which just a small division or subsidiary is sold. Many plans...

After an acquisition is completed, can I immediately sell the shares I receive in the buyer? This is premium content

The legality of exercising stock options, swapping the stock for the buyer's shares, and then immediately...

Will I be awarded additional stock options or restricted stock before an acquisition transaction is completed? This is premium content

While they are being sold, many companies make retention grants of additional options, restricted stock, or other compensation. In other cases...

In an acquisition, what happens to money that has been waiting to purchase shares in my ESPP? This is premium content

Check your company's plan for any specific provisions, including its flexibility to amend...

What happens to my stock options if my company acquires another business? This is premium content

Generally, your options should be unaffected by any acquisitions of other companies. However, there is an indirect economic effect...