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M&A: Basics




Articles (Jump to FAQs)

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

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.

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.

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FAQs (Jump to articles)

I see many different terms used to describe corporate transactions. What is the difference between a merger, an acquisition, a divestiture, and a spinoff?

It's important to know the difference, as this can trigger changes in your outstanding stock grants. An acquisition of a company occurs when...

How is the treatment determined for stock options and restricted stock in a merger or acquisition?

Many factors can affect what happens. The senior officers of the two companies in the transaction (or their boards) and their attorneys negotiate how grants will be handled according to...

What is a "lockup"? This is premium content

You will face a lockup when your company goes public, or perhaps in an acquisition. A lockup is a contractual restraint on...

How might the terms of my company's stock plan or my grant agreement affect the treatment of my options and restricted stock if my company were acquired? This is premium content

In many plans unvested options accelerate in some way...

What affects the willingness of a buyer to cash out or convert the seller's options other than the deal's tax structure? This is premium content

An acquirer may be more likely to seek a cashout of your stock options (or restricted stock) upon the consummation of an acquisition if...

How can I find out how much I will make from an acquisition of my company? This is premium content

You must learn about the deal's terms. Unless you are among the inner circle of management...

If my company is bought for stock of the acquirer, will I be able to purchase the same number of shares in the buyer as I am allowed to with my current options and restricted stock? This is premium content

Not necessarily. If an acquirer is using its stock to pay for shares of your company, then the purchase will be denominated in stock according to one of several methods...

What happens if our company's stock price or the acquirer's stock price fluctuates before the acquisition is completed? This is premium content

The result depends on the terms of the acquisition agreement. If the purchase price...

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