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I am trying to figure out my share calculations. I have vested 10,000 shares in my company and they are a private tech company that seems to be on track to be acquired in the next six months. Do I get paid the value of the new company's stock price on my 10,000 shares?

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    If that were the case, the acquiring company would be totally unable to negotiate how much they're paying to acquire your company, as it would already be set by their stock price. There is no reason 10,000 shares of one stock should have anywhere near the same value as 10,000 shares of a completely different stock. You'd be rightfully upset if someone took your 10k shares of AAPL (currently worth $1.9M) and gave you 10k shares of something like ENZC instead (currently worth... $200). Nov 21, 2023 at 19:54
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    Do you have actual shares, or options? I'm not positive, but I think the answer is different for the two scenarios. With shares, you own part of the acquired company, and the acquisition has to honor that. But with options, you merely have the option to buy shares at some fixed price. If the acquisition happens before you exercise that option, you now have an option to buy shares in a defunct entity, which has no value. Companies will often compensate you for that, but I don't think they're legally obligated to give you anything — which means what they do give you is basically up to them.
    – yshavit
    Nov 22, 2023 at 16:19

2 Answers 2

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If/When your company gets acquired, your 10,000 shares will either be bought outright at some fixed price based on the terms of the acquisition and you will receive cash, or they will be converted to the acquiring company's shares at some fixed ratio (e.g. you might get 1 new share for every 5 old shares). It might also be a combination of the two to prevent you from having fractional shares.

If your stock gets exchanged, you can decide at that time whether to sell them or not (provided that selling is allowed in the terms of the deal and your employment).

The tax consequences will be based on the difference in value between when your shares are sold and when you earned them.

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Your shares will be valued based on the agreed sale value of your company, divided by the total number of shares outstanding. ie: If the purchaser agrees to a price of $1M, and there are 100,000 shares outstanding, each share would be worth $10.

The compensation you receive could be in the form of shares of the purchasing company, or in cash. If your company has debt outstanding, the purchase price might first go to clearing out that debt, and then any remaining 'net' payment would be distributed to shareholders.

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