| Topic Name: |
Options and being bought out |
| Message Name: |
Acquisitions |
| Date Posted: |
07/05/2000 |
| In Reply To: |
I got a question that I haven't seen too much conversation about.
If I join a startup company and I was granted 10,000 shares with a strike price of $8.00, then, before we go public, we are bought out by another company that is public and has stock trading at $50.00 per share.
What happens to my options? What are the different things that could occur in a situation like this?
Thanks for your help!
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| Message: |
Usually what happens in a case like the one you describe, is that any options held in the acquired company are converted into options in the acquiring company. A conversion factor is established and applied to both the number of shares and the strike price. The conversion factor is established near the close of the deal and is usually some function of the amount paid for the acquired company. So, just because your stock is at $8 and the acquiring company stock is at $50 doesn't necessarily mean that the conversion factor will be 8 into 50.
Hope that helps,
Britness
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