But what happens to stock options after a company is acquired? Depending on whether your options are vested or unvested, a couple different things could happen following a merger or acquisition.

Since there are many different types of plans under the umbrella of stock options, it is important to review your specific situation with your financial advisor. Stock options can be either vested or unvested. When your employer grants the options, they have a vesting schedule is attached, which is the length of time that you have to wait before you can actually exercise the option to buy shares.

Whether your options are vested or unvested will in part determine what happens to the stock options granted by your former employer. The new company could handle your vested options a few ways. One way is to cash out your options.

The actual amount will depend on the exercise price of the options and the new price per share, but the effect will be the same: The new company could also assume the value of your vested options or substitute them with their own stock.

Both ways should allow you to continue to hold equity options or opt to exercise.

This typically happens for financial reasons or cultural — if the new company never offered equity to its employees before, they may not wish to change that now. Although less likely, the acquiring firm could accelerate the vesting of your unvested options. Finally, the new company could assume your current unvested stock options or substitute them, the same as for vested options. In the end, what will happen to your stock options really depends on how the two firms decide to structure the deal and the specific terms of the options provided by your employer.

ValvolineTM Completes Acquisition of Time-It Lube

As you can see, there are complex financial, legal, and retention issues at play. Web Development Black Door Creative. What happens to stock options after a company is acquired?

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Vested vs unvested options Stock options can be either vested or unvested. What kind of equity compensation do you have? Search this site on Google Search Google. Related posts What to Do After Receiving an Inheritance.

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