What happens to my shares in a takeover?
When a publicly traded company you own is targeted and successfully acquired in a corporate takeover, the ultimate fate of your shares depends entirely on whether the transaction is structured as a cash-out acquisition or a stock-for-stock exchange. In a cash takeover, the acquiring company purchases all outstanding shares at a predetermined fixed price per share, meaning your equity holdings are automatically sold, converted into cash, and deposited into your brokerage account, which is a taxable event if held in a taxable account. In a stock-for-stock merger, your shares of the target company are automatically canceled and exchanged for a specified ratio of new shares in the acquiring corporation, allowing you to maintain ongoing equity participation in the newly expanded corporate entity without triggering immediate capital gains tax liabilities. In both scenarios, the target company's stock is ultimately delisted from public exchanges.
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