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I own 200 common shares of a private company I worked for up until about 3 years ago. Today, I read in the news that they were acquired for a LOT of money but I don't know yet what the current stock price is. I still have stock options that I have 7 months left to exercise. I have a couple questions.

Now that the company has been acquired, is it likely I can sell the stock I currently own?

Would it make sense to continue exercising my stock options?

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    Your shares have, in a sense, already been sold: to the new company. Whether you will receive cash or an equivalent holding in the new company is spelled out in the terms of the acquisition.
    – chepner
    Jun 2, 2021 at 20:34
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    Usually, you only have a few months to exercise stock options after you stop working for the company. It would be very unusual for you to be able exercise any employee stock options more than a year after leaving the company.
    – David Schwartz
    Jun 3, 2021 at 9:42
  • Are either or both companies public (i.e. listed on an exchange, and any one can buy or sell shares) or private? Did the acquiring company actually buy all the shares, or just a majority of them? Are you sure your stock options are still valid?
    – jcaron
    Jun 3, 2021 at 16:44
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    I don't wanna bring bad news, but it's incredibly unlikely you can exercise the "7 month" ones you mentioned. (If I'm wrong, fantastic. But be prepared mentally :/ )
    – Fattie
    Jun 3, 2021 at 18:59
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    Presumably relevant: stackoverflow.blog/2021/06/02/prosus-acquires-stack-overflow/…
    – Joe
    Jun 3, 2021 at 21:12

3 Answers 3

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You should call up the company and ask that. (HR should be able to handle this.) Stock options cover a range of possibilities, and you'll probably need to contact them anyway to get this taken care of. You're not the only one asking these questions.

The good news is that you're probably in for a bit of a payday. "Buying" a company usually involves buying the shares, and you have both shares and the option to buy more.

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    The whole point of stock options in a private company is that they get turned into money if the company goes public or gets bought.
    – user3757614
    Jun 2, 2021 at 20:46
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    All 2000 options are good. You might need to "pay" money for the 1800 options, so you'll get more cash out of the 200 shares you actually own, but that's just something you'll want to go over with HR.
    – user3757614
    Jun 2, 2021 at 21:47
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    @JMArmbruster Also make sure to consult a tax accountant who understands stock options. You will likely need to pay for a consultation, and it will be worth it.
    – chrylis -cautiouslyoptimistic-
    Jun 3, 2021 at 2:10
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    Usually in cases like this any unvested options you may have vest immediately and you collect the profit on them as well.
    – Ross Millikan
    Jun 3, 2021 at 3:32
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    Just be careful you haven't been hit with any sort of forfeiture: both (1) everything unvested you lose immediately on leaving, and (2) even vested options may have an expiration date to exercise, sometimes X days after leaving, X<=365.
    – obscurans
    Jun 3, 2021 at 9:16
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Be aware that any shares you acquire by exercising options, which then get sold off (if that's how the acquiring company deals with outstanding shares of the target), will be considered short term capital gains. IOW, you didn't acquire and hold shares for over a year. So any profit you make (you wouldn't do this if the options weren't in-the-money) gets added to your base income for the year, and is taxed at your marginal tax rate (or higher, if part pushes you into a higher bracket).

tl;dr plan to put aside some earnings from stock sale to pay more income tax

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You will get some combination of zero or more Dollars together with zero or more shares in the acquiring company in exchange for the shares that you already own.

Your unvested options in the old company will be converted into unvested options in the acquiring company with the same vesting schedule.

Assuming the acquiring company is public, you can sell the shares you already own at any time, possibly following a lock-up period, which probably won't apply to you as a former employee (rather than a current employee).

edit: "unvested"

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    "Your options in the old company will be converted into options in the acquiring company." - No. OP will still profit, but you don't know the terms of the sale. A takeover by a public company can still result in an all cash transaction. Assuming OP will have stock or options in that company is wrong.
    – JTP - Apologise to Monica ♦
    Jun 3, 2021 at 10:32
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    On Stack Exchange, edits to posts are logged (click the “edited <time> ago” link to see them). The only exceptions are edits within a few minutes of creating the post. So when you edit your post, go ahead and change it to what it should have been. There’s a small text box under the editing window to leave notes on why you made the edit - your “edit: unvested” note should go there instead of inside the post itself.
    – Lawrence
    Jun 3, 2021 at 17:08

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