What happens to my stock after a merger?
When a publicly traded company whose stock you own is successfully acquired in a corporate merger, the ultimate outcome for your equity holdings depends entirely on how the transaction is legally structured by the corporate entities. If the takeover is structured as an all-cash transaction, your shares are automatically canceled and converted into a fixed cash payout per share, which is deposited directly into your brokerage account and treated as a taxable sale event if held in a taxable portfolio. Conversely, if the merger is executed as a stock-for-stock exchange, your original shares are automatically converted into a predetermined ratio of new shares in the surviving parent company, allowing you to maintain ongoing equity participation in the newly expanded corporate entity without triggering immediate capital gains tax liabilities. In both operational scenarios, the target company's stock is ultimately retired and delisted from public stock exchanges upon the final closing of the merger agreement.
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