15

If I buy shares in a big company like Intel or Microsoft I (can) receive a dividend. So these shares (can) pay "profit".

However, if the company is bought, do i also receive a split of the "equity"/sale price?

  • 17
    The shares are equity. – chrylis -cautiouslyoptimistic- Feb 25 at 16:55
  • 19
    It's worth thinking about what exactly "the company is bought" means. It's not something that "just happens", if somebody buys 100% of the company, then it obviously must include them buying your shares as well, for money or other consideration such as shares of the other company in a merger deal. – Peteris Feb 25 at 17:51
  • 3
    @user997112 during many takeovers only part of the shares change hands. If other people sell their shares (say, 60%) to someone else, that allows the buyer to change management, but you still keep your shares and don't get any money because you didn't sell your part of the company. – Peteris Feb 25 at 18:32
  • 3
    @user997112 If they didn't buy your shares, then you still have shares in the company. If the company still has the same assets, you still have shares in those assets. If the company sold off assets, you have shares in whatever the company got in exchange for those assets. – David Schwartz Feb 25 at 20:36
  • 2
    @Aequitas That's a separate question; but in essence, corporate law / company bylaws / shareholder's agreements may force you to sell shares in certain conditions; and in certain conditions the new owner of other shares may be legally required to make you a binding offer to buy your shares at a particular price. So forced deals of shares are a thing, the details are sometimes tricky. – Peteris Feb 26 at 8:12
40

Your shares represent partial ownership of the company. You get dividends when the company transfers some of its profits to its owners.

When the company is sold, it will usually be for some combination of cash and shares in the company making the purchase. You will receive your share of that cash and shares in proportion to your ownership interest.

| improve this answer | |
3

When you own a share of a company, then that means that at least a small part of the company was already bought by someone: you!

A merger or acquisition of publicly traded companies is often done by a stock swap. You lose your stock and get stock of the new owning company in return which should have the same market value. (about the same value - mergers and acquisition can result in a lot of stock price fluctuation in either direction, depending on whether the market thinks that the new corporation is better or worse off than before).

Another form of acquisition is if one company just buys up all the stock of another company until they have a shareholder majority. When there is a majority of stock held by people who agree with that takeover, then it's possible that they make a private agreement with the buyer regarding the sale price of their stock. In that case the price of your stock won't change. When the buyer can not come to such an agreement, then the buyer might try a "hostile takeover". They go to the public stock exchange and post buy offers for the stock above market rate, hoping to encourage small stock owners (like you) to take up the offer and sell their stock to them at the inflated price. If you take that opportunity, you might be able to sell your stock at a profit.

| improve this answer | |

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.