What Happens to Your Shares When a Company Is Bought
You usually do nothing and your broker swaps the shares at closing. This guide explains the consideration, the timing and what the tax section of the proxy says.
When a company you own is bought, your shares are automatically converted at closing into whatever the merger agreement pays: cash, shares of the buyer, or a mix. Shares held at a broker are swapped without any action from you. The proxy statement or tender offer documents give the amounts and expected tax treatment.
What will I receive for my shares: cash, stock or both?
You receive the “merger consideration” set in the agreement, and it comes in one of three forms.
| Type of deal | What you get per share | What can change the value before closing |
|---|---|---|
| All cash | A fixed dollar amount, such as $15.50 | Nothing, unless the buyer raises the offer |
| All stock | A set number of buyer shares (the exchange ratio) | The buyer’s share price |
| Cash and stock | A dollar amount plus a fraction of a buyer share | The buyer’s share price for the stock part |
| Election deal | Your choice of cash or stock, subject to proration if too many holders pick one | The buyer’s share price and how other holders elect |
A fixed exchange ratio means you get the same number of buyer shares no matter how the buyer’s stock moves. Some agreements instead fix the dollar value and let the ratio float within a range (a “collar”). The proxy statement explains which one your deal uses.
How does an exchange ratio work in a real deal?
Synopsys’s acquisition of Ansys is a recent cash-and-stock example. According to Ansys’s Form 8-K filed at closing on July 17, 2025, each Ansys share was converted into 0.3399 of a Synopsys share plus $199.91 in cash.
Those were not the numbers announced at signing. The merger agreement capped the number of new Synopsys shares at just under 20% of Synopsys’s outstanding stock, so at closing the exchange ratio was cut and the cash amount was raised to offset it. Final figures can move like this when an agreement includes a share cap, so check the closing 8-K for what was actually paid.
Here is how the conversion works for a holder of 150 Ansys shares:
- Stock: 150 x 0.3399 = 50.985 Synopsys shares.
- You receive 50 whole Synopsys shares.
- The 0.985 fraction is paid in cash (“cash in lieu of fractional shares”), as the 8-K states.
- Cash: 150 x $199.91 = $29,986.50, before any tax withholding.
When does my stock stop trading?
Your shares trade normally until the deal closes, then the exchange suspends trading and the company files to delist. In the Ansys deal, the company asked Nasdaq to suspend trading before the market opened on the closing date, and the ANSS symbol stopped trading.
If you sell before closing, you get the market price, not the deal price, and US stock trades settle one business day after the trade date (T+1) since May 28, 2024, under an SEC rule change. Why the market price usually sits below the offer is covered in our explainer on why a stock trades below the deal price.
When does the money or new stock reach my brokerage account?
The cash or new shares are credited after closing, once the paying agent named in the merger agreement processes the exchange. Timing depends on the agent and your broker, and the proxy statement describes the exchange procedure.
- On closing day, the target shares are canceled and converted into the right to receive the consideration.
- The paying (or exchange) agent receives the cash and buyer shares from the acquirer.
- For shares held in “street name” at a broker, the agent pays the broker through the clearing system, and the broker credits your account.
- If you hold shares directly with the company’s transfer agent or as paper certificates, you get a letter of transmittal. Payment is made after you return it with any certificates.
- Cash for fractional shares is paid with the rest of the consideration.
In a tender offer, the order is different: you choose whether to tender before the deadline, and shares not tendered are converted in a follow-up merger. Our guide to how tender offers work covers those steps.
Is the payment taxable?
An all-cash deal is generally treated as a sale of your shares. You report a capital gain or loss equal to the cash received minus your cost basis, and your broker reports the proceeds on Form 1099-B.
An all-stock deal structured as a tax-free reorganization under Section 368 of the Internal Revenue Code generally lets you defer tax: your old basis carries over to the new shares. In a mixed deal, the cash part (called “boot”) is generally taxable to the extent of your gain, and cash for fractional shares is treated as a small sale. The proxy statement or prospectus has a section titled “Material U.S. Federal Income Tax Consequences” that says how the companies expect the deal to be treated. Our guide to how cash and stock mergers are taxed walks through examples. How it applies to your shares depends on your basis and holding period, so ask a tax professional.
Bottom line
Keep the closing 8-K, because it records the final per-share cash and exchange ratio, which can differ from the announcement. Your broker’s 1099-B for the closing year will show proceeds from the deal; if you received buyer shares in a tax-free exchange, confirm that the broker carried over your original cost basis.
FAQ
Do I have to do anything when a company I own is acquired?
For a merger that needs a shareholder vote, you can vote but do not need to take action to be paid; your broker handles the exchange. In a tender offer, you decide whether to tender before the expiration date, and untendered shares are usually converted in a second-step merger.
What happens if the deal falls through?
You keep your shares, and they keep trading on the exchange. The price can move sharply after a deal is terminated, because the offer no longer sets a reference point.
What if I do not want the buyer’s stock?
In an all-stock deal you receive buyer shares at closing and can sell them afterward like any other stock. Some deals let holders elect cash or stock, subject to proration.
Can I refuse the deal price in a cash merger?
Under Delaware law, shareholders who do not vote for a cash merger and follow strict steps can ask a court to set fair value through appraisal rights. The process has deadlines and legal costs, and the court can set a value below the deal price.
