company sale/stock vesting

[chiver78]

I hope this is the right place to ask, if not please feel free to move the thread. thanks in advance!

my company is in talks with another to be acquired. we have been told that if/when that happens, all unvested stock (options, RSUs) will vest. I'm looking for the announcement for the exact syntax of that statement - I can't recall if it said immediately, after 'x' period of time, or what.

does anyone have experience with this? my situation is that I have RSUs only. since I'm still racing some debt over on WIRR, I've been participating in the Next-Day Sale option on my quarterly ESPP, and cashing out the options as they vest. the RSUs had been vesting over 3 year periods, so I have the 3 years' worth that are still unvested. I'm just curious what to expect. I've done the math, and what's left unvested will get me completely out of the red with some funds left over. so, I am really trying to wait out a sale instead of just bailing off the sinking ship.

[rovo]

I'll give this a shot but I think we need more info. Maybe the OP can correct some of my assumptions if they are in error.

The OP has options to buy stock, restrictive stock, and has also been buying company stock via an ESPP (Employee Stock Purchase Plan). I have no idea what kind of a market exists for this company's stock. Is it a public company or private?

The vesting of all options at the time of sale is typical in this type of transaction. The buying company will be purchasing the stock of the selling company. Generally when this happens the buyer offers a premium over the existing stock price. Sometimes this premium can be huge.

Apparently there is some sort of market for the stock as the OP has been selling the previously acquired shares. Current market value and the value to the buyer are two completely different things.

If it was me, I would cease all selling of any shares I was holding until the negotiations are complete and the terms of the deal are announced. The probability of an upside move is much, much greater than the risk of a down side move.

[chiver78]

I'll see what I can answer. my experience with stocks has been solely through my own company's stocks.

The OP has options to buy stock, restrictive stock, and has also been buying company stock via an ESPP (Employee Stock Purchase Plan).

correct. I can purchase ESPP quarterly, with what's been withheld from my paycheck. I have elected to turn all of these shares around for next-day sales to help pay down balances. as far as options/RSUs - these were given as part of the bonus structure at my compensation level. when I started, it was options. the company moved to RSUs back in 2007. I've had one set vest, that first set. I've got 2008-2010's RSUs left unvested.

I have no idea what kind of a market exists for this company's stock. Is it a public company or private?

it's got a ticker symbol. that makes it publicly traded, I think? we have been trading in the $70s while all the rumors have been flying. as recently as a year and a half ago, we were in the $80s.

[chiver78]

Feb 3, 2011 13:16:52 GMT -5 rovo said:

The vesting of all options at the time of sale is typical in this type of transaction. The buying company will be purchasing the stock of the selling company. Generally when this happens the buyer offers a premium over the existing stock price. Sometimes this premium can be huge.

now let me turn this around and ask some questions about this. the rumors that have been flying about my company have had to do with the purchasing company offering hostile bids much lower than my company thinks it is worth. now they are talking about something called a 'contingent value right' that could be a premium later. at least that's what I'm getting out of the articles I've been reading. how much later would that kick in, would it be tacked onto whatever I'd get for the newly vested RSUs whenever they end up vesting? would I all of a sudden hold stock in the new company, and would I have to hold onto it in order to get that additional value?

oh, and does this all become official when the sale is finalized?

I really don't know much about stocks......but I can say that the discounts and perks with the ESPP has been nice while I've been here.

[rovo]

chiver78, Is your company profitable? What is the current PE of your company? It would be a lot easier if you just told us the symbol but I understand your reluctance to do so.

I stick with my original comment about you not selling any shares until the deal is announced. Expecting $80 to $100 per share for the buyout is not unreasonable.

I was involved with a buyout back in Dec. '09 when the stock was selling at about $90. The offer price of the deal was $150.

[chiver78]

well, they keep telling us we're profitable.....as they slash project budgets and have been laying people off. oh, and yet we're still hiring. all I know is that it is definitely not the same place that I loved working at for years prior. the past couple have been very crappy in comparison.

as far as the stock, I can't sell anything right now because I don't have anything vested that could be liquidated. what I'm asking is how long does it take for the vesting to happen once the sale is announced or finalized? does the sale have to be finalized to vest? I am thinking yes, but don't know for sure. I'm looking to figure out numbers once everything vests so I can figure out whether I want to stick around or not.

I think my job is safe, my work is such that I definitely have counterparts in the acquiring company but I am much more familiar with the equipment on-site. given that I maintain it, I think I'm safe for at least a little while to be able to leave on my terms rather than an immediate layoff.

[rovo]

Typically all outstanding options are vested and paid off at the time of sale. This should be good news to you as you will not have to wait years for the options to vest.

Again, the PE of your company's stock tells us a lot about the premium already in the stock price. Type in your company's symbol and let me know what the PE is. This is just a number and we can not determine the company name from this number.

[chiver78]

PE? I just did a "detailed quote" and nothing says PE.

edit: went to the nasdaq site and found something that says P/E
that ratio is N/A, forward P/E is 57.76

now if you can explain what these are, that would be cool. I feel like I'm quoting Greek.

[rovo]

Sorry for the delay but I suddenly got busy.

Yup, PE or P/E are the same thing. The N/A implies a loss for the last 12 months. The forward PE implies an expectation of being profitable in the future. Forward PE of 57 is high and defines a very low level of profits.

Just so you know, P/E means CURRENT_STOCK_PRICE / PROFITS FROM LAST 12 MONTHS.