If the deal closes, your shares are converted automatically — into cash, into the buyer’s shares, or both. You usually can’t keep the old shares. In a cash deal held in a taxable account, you’re treated as selling, so you may owe capital gains tax for the year it closes. In a qualifying stock-for-stock deal, tax is usually deferred. If it’s a tender offer, you can withdraw while it’s open — and some all-cash offers can now close in as few as 10 business days.
See what you’ll receive and the estimated taxable gain →
You really have three choices: sell now on the market, hold until closing, or — in a tender offer — tender or wait. Here’s what each means.
Rules verified October 22, 2026 against SEC rules and IRS guidance.
How to read the tags in this guide: AUTOMATIC happens to your shares without any action from you. YOUR CHOICE is a decision you make. CHECK YOUR DEAL means the details are set by that deal’s own documents.
Buyout Payout & Tax Estimator
Enter your shares and the deal terms to see an estimate of what you’d receive and which part may be taxable.
Use the numbers from the deal’s press release, proxy, or Offer to Purchase. Nothing you type leaves your device.
Cash, Stock, or Both: What You’ll Receive
At closing, your shares are converted into a fixed amount of cash, a fixed number of the buyer’s shares, or a mix of both — and the old shares stop trading.
AUTOMATIC CHECK YOUR DEAL
In an all-cash deal, each share becomes a set amount of cash. In an all-stock deal, each share becomes a set fraction or multiple of the acquirer’s shares, called the exchange ratio. A mixed deal pays both.
Some stock deals use a collar or a floating ratio instead of a fixed one. Some mixed deals let you elect cash or stock, and then prorate if too many holders pick the same one. The merger agreement spells all of this out.
All cash
What you receive: a fixed amount of cash per share.
When: when the deal closes, or when a tender offer is completed.
Usual tax treatment (taxable account): treated as a sale, taxed for the year the deal closes.
Basis afterward: none. You hold cash, not shares.
All stock
What you receive: acquirer shares at the exchange ratio, with cash for any fraction.
When: at closing.
Usual tax treatment (taxable account): gain generally deferred if the deal qualifies as a tax-free reorganization. Cash for a fraction is treated as a small sale.
Basis afterward: generally carries over from your old shares, and the old holding period generally carries over too.
Cash + stock
What you receive: cash and acquirer shares.
When: at closing.
Usual tax treatment (taxable account): gain may be recognized up to the cash received. A loss generally isn’t recognized.
Basis afterward: carryover basis, adjusted for the cash and any gain recognized. The deal’s Form 8937 gives the numbers.
| Deal type | What you receive | When | Usual tax treatment (taxable account) | Basis afterward |
|---|---|---|---|---|
| All cash | A fixed amount of cash per share | When the deal closes, or when a tender offer is completed | Treated as a sale; taxed for the year the deal closes | None. You hold cash, not shares. |
| All stock | Acquirer shares at the exchange ratio; cash for any fraction | At closing | Gain generally deferred if the deal qualifies as a reorganization; cash for a fraction is treated as a small sale | Generally carries over from your old shares, with the old holding period |
| Cash + stock | Cash and acquirer shares | At closing | Gain may be recognized up to the cash received; a loss generally isn’t recognized | Carryover basis, adjusted for cash and any gain recognized (see Form 8937) |
Three hypothetical examples
Cash: Target Co. holders receive $50.00 per share. If you own 100 shares, you’d receive $5,000.
Stock: Buyer Co. offers 0.45 of its shares for each Target Co. share. If you own 110 shares, 110 × 0.45 = 49.5. You’d receive 49 whole Buyer Co. shares, plus cash for the half share.
Mixed: $20.00 in cash plus 0.25 Buyer Co. shares per Target Co. share. If you own 100 shares, you’d receive $2,000 and 25 Buyer Co. shares.
These examples are made up to show the math. They are not real deals.
A company that is failing, rather than being bought, is a different situation: see what happens to a delisted or bankrupt stock. For another corporate action that changes your share count, see reverse stock splits.
The Buyout Timeline, Step by Step
Most buyouts move through the same seven steps, and only a couple of them give you a choice.
- Announcement. The companies announce the price and terms. CHECK YOUR DEAL
- Filings. The target files a proxy statement or Form S-4 for a vote, or the buyer files an Offer to Purchase and the target files a Schedule 14D-9 for a tender offer. CHECK YOUR DEAL
- Vote or tender period. Shareholders vote on a merger, or a tender offer stays open for a set window. In a vote, the result binds every holder. In a tender offer, tendering is your decision. AUTOMATIC YOUR CHOICE
- Regulatory approval. Antitrust and other reviews run in the background. AUTOMATIC
- Closing. The deal completes. AUTOMATIC
- Payment or conversion. Cash is paid or new shares are issued. AUTOMATIC CHECK YOUR DEAL for timing.
- Delisting. The target’s shares stop trading. AUTOMATIC
How long this takes varies a lot. As a general range, not a promise: a negotiated all-cash tender offer can close in weeks to a couple of months, a merger that needs a shareholder vote often takes several months, and deals facing long antitrust or foreign reviews can take a year or more.
At a brokerage, cash usually shows up in your account within a few business days of closing, but the deal documents and your broker set the actual timing. It typically lands in your core cash position; see how a brokerage cash sweep works.
Should You Sell Before It Closes?
Selling now, holding to closing, and (in a tender offer) tendering are all legitimate choices with different risks, and nobody can tell you which one fits your situation.
YOUR CHOICE
Why the stock trades below the offer
After an announcement, the stock usually trades a little under the deal price. That gap is called the deal spread. It generally reflects two things: the time until you would be paid, and the chance the deal doesn’t close.
Deals can fail for many reasons, such as a failed shareholder vote, a regulator’s objection, or too few shares tendered. The more doubt about the deal, the wider the gap tends to be.
What happens if the deal breaks
If a deal is called off, your shares keep trading as before. The price can fall back toward where it was before the announcement, stay near the offer if another buyer appears, or move on the company’s own results. Nothing is guaranteed in either direction.
The trade-offs
Selling on the market gets you today’s price right away and removes deal risk, but you give up the rest of the gap and any chance of a higher bid. Holding keeps both of those, but you carry the risk and the wait. In a taxable account, a market sale is taxed for the year you sell, while a closing is taxed for the year it closes.
| Choice | What happens | Risk | Tax |
|---|---|---|---|
| Sell now on the market | You receive the current market price at once, and you no longer own the shares. | You may give up the remaining gap to the deal price or a higher bid. | Taxable sale in the year you sell (taxable accounts). |
| Hold to closing | Your shares convert at closing into cash, new shares, or both. | Deal delay or failure; the price can move before closing. | Depends on the deal: sale, deferral, or a mix. See the tax section. |
| Tender (or wait) | In a tender offer you deliver shares through your broker, or you wait for the second-step merger. | Tendered shares are tied up until the offer ends unless you withdraw; waiting can mean a later payment. | A cash tender or a cash-out merger is generally a taxable sale; the timing follows the deal documents. |
Losses from a sale may be usable; see tax-loss harvesting.
Tender Offers: How They Work
A tender offer is a direct offer to buy shares from shareholders at a set price during a set window, and you usually accept it through your broker.
YOUR CHOICE CHECK YOUR DEAL
A tender offer differs from a vote-based merger. In a merger, shareholders vote and the result applies to everyone. In a tender offer, each holder decides whether to deliver shares. Many buyouts use both: a tender offer first, then a second-step merger for the rest.
You can withdraw a tender while the offer is open.
Withdrawal rights
Under Rule 14d-7, anyone who has tendered shares can withdraw them at any time while the offer remains open. There is one exception: the bidder doesn’t have to offer withdrawal rights during a subsequent offering period, the extra window some offers add after the first one ends. Your broker’s instructions and the Offer to Purchase explain how to withdraw.
Your broker’s deadline
Brokers often set an earlier internal cutoff than the offer’s official expiration time. Ask your broker for its deadline as soon as an offer starts, especially now that some offers can be short.
The April 16, 2026 order: 10 business days, for some offers
Tender offers have generally had to stay open at least 20 business days under Exchange Act Rules 14e-1(a) and 13e-4(f)(1)(i). On April 16, 2026, the SEC’s Division of Corporation Finance issued an exemptive order allowing a 10-business-day minimum for certain offers. It is not a rule for all cash deals. In summary, for an offer for a reporting company, the order requires that:
- the offer is paid only in cash, at a fixed price;
- a third-party offer is made under a negotiated merger agreement and is for all shares of the class;
- the offer is not a going-private deal under Rule 13e-3;
- no other tender offer for the same shares is already announced; and
- the offer is announced by press release with a link to the offer documents, with price or percentage changes announced at least five business days before expiration.
The order also covers certain issuer buybacks done by tender offer, including some by private companies, again for cash at a fixed price. It does not cover hostile offers or Rule 13e-3 going-private deals. If a competing offer is announced after the first one starts, the first offer must stay open at least 20 business days from the day it began.
A 10-day minimum is a floor, not a schedule. Offers are often extended, and the order itself says the staff may reconsider, modify, or withdraw the relief. It does not change withdrawal rights or the anti-fraud rules.
| Rule | What it means for you | Source |
|---|---|---|
| 20-business-day general minimum | Most tender offers must stay open at least 20 business days. | Rule 14e-1(a); Rule 13e-4(f)(1)(i) |
| 10-business-day minimum for eligible negotiated all-cash offers | Some fixed-price, all-cash offers can close in as few as 10 business days. Less time to decide, so check your broker’s cutoff. | SEC order, April 16, 2026 |
| Withdrawal while the offer is open | You can take back tendered shares until the offer ends. | Rule 14d-7(a)(1) |
| None in a subsequent offering period | If the offer adds an extra window after the first ends, tenders in it generally can’t be withdrawn. | Rule 14d-7(a)(2) |
| Same consideration in a §251(h) back-end merger | Holders who don’t tender are cashed out in the second step for the same amount and kind of consideration. | DGCL §251(h) |
What If You Don’t Tender?
In a two-step deal, not tendering usually means you are paid later through the second-step merger, not that you lose your shares.
YOUR CHOICE CHECK YOUR DEAL
Not tendering usually means getting paid later — not losing your shares. Check your deal.
Many Delaware targets use a two-step structure under DGCL §251(h). First comes the tender offer. Then, as soon as practicable after it closes, the buyer completes a merger without a shareholder vote. The statute requires that the merger pay holders the same amount and kind of consideration as the tender offer did.
So a holder who skips the tender generally receives the same price, just later. The wait can be several weeks, and the deal documents usually say no interest is paid for it. You also have no say in the second step once the buyer holds enough shares.
Two things to check in your deal’s Offer to Purchase and Schedule 14D-9. First, how and when non-tendering holders get paid. Second, whether the target is a Delaware company at all, because other states’ rules and some deal structures differ.
Can You Refuse? Appraisal Rights
You can vote no or skip a tender, but if the deal closes your shares are converted anyway; appraisal is a narrow legal route that is rarely practical for small holders.
YOUR CHOICE CHECK YOUR DEAL
Under DGCL §262, some holders of Delaware companies can ask a court to decide the “fair value” of their shares instead of taking the deal price. It generally isn’t available for shares you tendered into the offer. It is available for shares you didn’t tender in a §251(h) merger, but only if you follow the statutory steps and deadlines. It is generally not triggered by a merger that pays publicly traded stock, though it is available in every §251(h) merger.
The court’s fair value can come out higher, lower, or the same as the deal price. For listed companies, a 2016 change means the court must dismiss an appraisal case unless the shares seeking appraisal exceed 1% of the class, or their deal value exceeds $1 million. Short-form mergers are an exception. A small holder usually can’t clear that bar alone.
Treat appraisal as something to be aware of, not a strategy. If you are weighing it, talk to a securities lawyer before the deadline in your proxy or notice.
Mini-Tender Offers
A mini-tender offer is an unsolicited offer for less than 5% of a company’s shares, often at a price below the market, and you generally can’t change your mind once you tender.
YOUR CHOICE CHECK YOUR DEAL
Mini-tender offers can be below market, and you usually can’t back out.
Offers for less than 5% fall outside the SEC’s filing, disclosure, and minimum-period rules for larger tender offers, and they typically don’t carry the same withdrawal rights. The SEC has warned that bidders may hope you won’t compare the offer price to the market price. Some bidders have also been slow to pay.
If an offer letter shows up that you didn’t expect, compare its price with today’s market price, find out who the bidder is, and read the full terms before you do anything. A genuine buyout of your company is usually announced by the company and appears in its SEC filings on EDGAR. Read the SEC’s mini-tender offer alert and the Investor.gov glossary entry.
How a Buyout Is Taxed
In a taxable account, a cash buyout is generally treated as a sale taxed for the year it closes, a qualifying stock-for-stock deal is generally deferred, and an IRA or 401(k) isn’t taxed currently.
CHECK YOUR DEAL
These are general rules for U.S. taxpayers. The deal’s tax treatment depends on how it is structured, and the company states its view in the proxy and its Form 8937.
| Situation | Taxed now? | What’s taxed | Where it’s reported |
|---|---|---|---|
| All cash | Yes, for the year the deal closes (taxable accounts) | Cash received minus your cost basis. Long-term if held more than one year. | Form 1099-B from your broker; Form 8949 and Schedule D on your return |
| Qualifying all-stock | Generally no; gain is deferred | Nothing on the shares you receive. New shares generally keep your old basis and holding period. | Form 8937 from the company explains basis |
| Cash + stock | Partly | Gain may be recognized up to the cash (“boot”) received; a loss generally isn’t recognized. | Form 8937; your broker’s 1099-B may show the cash part |
| Cash for a fractional share | Yes | Generally treated as a sale of the fraction: cash received minus the basis allocated to it. | Form 1099-B, often with your other sales |
| IRA / 401(k) | No current tax | Nothing while the money stays in the account. | Not reported as a sale |
Cash deals. A cash buyout is treated as a sale, so you report a gain or loss equal to the cash minus your cost basis. It is not an “immediate” tax: it falls in the year the deal closes. A deal that closes in early January is taxed in that new year. For rates, see capital gains tax.
Stock-for-stock deals. If the deal qualifies as a reorganization under IRC §368, gain is generally deferred. Your new shares generally take your old basis, and your holding period generally carries over. The deferral is not forgiveness: you pay tax when you later sell the new shares.
Mixed deals. Gain may be recognized up to the cash you receive, under IRC §356, while a loss generally isn’t recognized.
Fractional shares. Cash paid in place of a fraction is generally treated as if you received the fraction and sold it.
Reinvesting buyout cash doesn’t defer the tax.
There is no 1031-style exchange for stocks, so buying something else with the cash doesn’t postpone the tax. If a large cash deal will leave you owing, see quarterly estimated taxes.
Your New Cost Basis: Form 8937
Form 8937 is the company’s own explanation of how the deal changes your cost basis, and it is usually posted on its investor-relations site.
CHECK YOUR DEAL
Issuers report actions that affect basis, such as mergers, on Form 8937 under IRC §6045B. They generally file or post it within 45 days of the action. See the IRS page for Form 8937 and its instructions.
On the form, three lines matter most. Line 14 describes the action and its date. Line 15 gives the effect on your basis, per share or as a percentage. Line 16 explains how that was calculated. A statement attached to the form usually covers the holding period and how cash for fractional shares is treated.
After closing, save the form and compare it with the basis your broker reports on Form 1099-B. If basis is missing or looks wrong, fix it before you file; see what to do when basis is missing from your 1099-B. If you inherited the shares, your starting basis is different; see inherited stock cost basis.
Options, Employee Stock, and Paper Certificates
Listed options are adjusted by the Options Clearing Corporation, employee equity follows the plan’s rules, and paper certificates are exchanged through the deal’s exchange agent.
AUTOMATIC CHECK YOUR DEAL
Listed options. The Options Clearing Corporation (OCC) adjusts options after a merger. In a cash deal, the deliverable typically becomes cash per contract; in a stock deal it can become the acquirer’s shares. OCC publishes a memo for each case. For what happens near expiration, see when an option expires in the money.
Employee equity. RSUs, options, and ESPP shares follow the plan’s rules and the merger agreement, which this guide doesn’t cover. For basis, see RSU cost basis and ESPP cost basis.
Paper certificates and DRIP accounts. Shares held outside a broker are exchanged through the exchange agent named in the deal documents. You may need to send in the certificate with a letter of transmittal. Unclaimed proceeds can eventually go to the state as unclaimed property; see how to find unclaimed money.
The Buyout Checklist
Work through these eight steps once the deal is announced; you can copy them to keep.
- Find the deal documents on SEC EDGAR or the company’s investor-relations page: the merger agreement press release, the proxy or Form S-4, or the Offer to Purchase and Schedule 14D-9.
- Write down the consideration per share, any election or proration, the expected closing, the tender expiration date, and the withdrawal deadline.
- Know your broker’s cutoff. Brokers often set an earlier internal deadline to tender.
- Check the price gap. Trading below the offer usually reflects deal risk and time. Decide whether to sell now or wait, knowing both outcomes.
- Got an unsolicited offer letter? Check whether it’s a mini-tender and compare the offer to the market price.
- Taxable account? Estimate the gain. For a large cash deal, consider estimated taxes.
- After closing: download the deal’s Form 8937, check the basis on your Form 1099-B, and fix it before filing if it’s missing.
- Paper certificates or a DRIP account? Contact the exchange agent named in the deal documents.
FAQ
Short answers to the questions people ask most; your deal’s documents always control.
What happens to my stock when a company is bought out?
At closing, your shares are converted into cash, the buyer’s shares, or both, and the old shares stop trading. In a tender offer, you also choose whether to tender.
Do my shares sell automatically?
Conversion at closing is automatic, whether or not you voted. The exception is a tender offer, where delivering shares is your decision, although in a two-step deal the non-tendered shares are generally converted afterward.
How long after closing do I get paid?
At a broker, cash usually arrives within a few business days, though timing varies by deal and broker. Paper certificate holders must go through the exchange agent and may wait longer.
Why did my shares disappear from my account?
They were converted at closing. Look for cash or new shares from the buyer. If you see neither, ask your broker, or the exchange agent if you hold paper certificates.
Why is the stock trading below the buyout price?
The gap generally reflects the time until payment and the chance the deal doesn’t close. It is not a sign by itself that the deal will fail.
Should I sell before the deal closes?
That is your decision. Selling gets you today’s price and removes deal risk; holding keeps the rest of the gap, and the risk. See the trade-offs above. This guide is not investment advice.
What is a tender offer?
It is a direct offer to buy shares from holders at a set price during a set window. You accept it by tendering shares, usually through your broker.
Can I withdraw shares I tendered?
Yes, while the offer is open (Rule 14d-7). Withdrawal rights aren’t required during a subsequent offering period.
How long does a tender offer stay open in 2026?
Generally at least 20 business days. Under an April 16, 2026 SEC order, some negotiated, all-cash, fixed-price offers can run as few as 10 business days. Offers are often extended, so check the expiration date in the Offer to Purchase.
What happens if I don’t tender?
In a two-step deal you generally receive the same consideration later, through the second-step merger, often without interest. Check your deal’s documents.
Can I refuse a buyout?
You can vote against a merger or decline to tender, but if the deal closes, your shares are converted anyway. Appraisal rights are a limited legal route and are rarely practical for small holders.
What is a mini-tender offer?
An unsolicited offer for less than 5% of a company’s shares, often below market and without the usual withdrawal rights. Compare the price to the market before doing anything.
Is a cash buyout taxed as a capital gain?
In a taxable account, yes: it is treated as a sale, with gain or loss reported for the year the deal closes. It is long-term if you held the shares more than one year. An IRA or 401(k) isn’t taxed currently.
Is a stock-for-stock merger taxable?
If it qualifies as a reorganization, gain is generally deferred and your basis carries over. Cash for fractional shares, or cash in a mixed deal, can be taxable. See the deal’s Form 8937.
How is cash for fractional shares taxed?
It is generally treated as a sale of the fraction, so you report gain or loss equal to the cash minus the basis allocated to that fraction.
If I reinvest the cash, do I still owe tax?
Yes. Reinvesting doesn’t defer tax on a taxable sale, and there is no 1031-style exchange for stocks.
Where do I find my new cost basis?
On the company’s Form 8937, usually posted on its investor-relations site, and on your broker’s Form 1099-B. If they disagree, sort it out before you file.
What happens to my options in an acquisition?
Listed options are adjusted by the OCC, often into a cash deliverable in a cash deal. Employee options follow the plan and merger agreement.
General information, not investment, legal, or tax advice. Each transaction’s terms, timing, and tax treatment are set by its own documents and filings. Rules verified on October 22, 2026.
Last updated:
Daniel Hayes is the founder and sole researcher at AdvoraHQ. He covers U.S. personal finance, insurance, and consumer law — working directly from IRS publications, federal and state statutes, court opinions, and SEC filings rather than secondary summaries. His focus is the gap between what readers think they know and what the source documents actually say. Daniel is not a licensed attorney, CPA, or financial advisor; his articles are educational and not personalized advice. Reach him at Daniel.Hayes@advorahq.com.
