Before Your Company Is Sold for Cash

I’m Mateo Dellovo, a fiduciary adviser for people paid in company stock. When your company agrees to be bought for cash, what happens to your shares, RSUs, options and ESPP is written into the merger agreement, and the deal can take weeks or months to close. This page covers what four cash deals announced in 2025 said about each kind of award, how a cash deal moves, how the cash is taxed, and the questions to answer before the close.

The merger agreement and your equity plan decide this, and they differ from deal to deal. Here is what four all cash deals announced in 2025 said, in their merger agreements and SEC filings. Yours may say something else.

• Shares you own. Each share converts into the right to receive the cash price at closing.
• Vested RSUs. Paid in cash, the number of shares times the deal price.
• Unvested RSUs. Become cash awards paid on the same vesting schedule (Dayforce, Potbelly), or the buyer’s RSUs with the same vesting terms (Confluent). Exact Sciences treats RSUs granted before signing as fully vested and pays them in cash.
• Options with an exercise price below the deal price. Cashed out for the gap between the deal price and the exercise price (Dayforce, Confluent, Potbelly). Confluent and Potbelly pay unvested options this way too. Dayforce cancels unvested options with no payment.
• Options with an exercise price at or above the deal price. Canceled with no payment (Dayforce, Confluent).
• ESPP. No new offering periods. The current one ends with a final purchase no later than five business days before closing, and then the plan ends (Dayforce).
• Protection if you’re let go. Potbelly’s converted awards speed up if you’re let go without cause, or leave for good reason, within 24 months after closing. Exact Sciences gives RSUs granted after signing similar protection.

The deals are Dayforce’s sale to Thoma Bravo, Confluent’s sale to IBM, Potbelly’s sale to RaceTrac and Exact Sciences’ sale to Abbott, all announced in 2025. The filings are listed under Sources.

1. Announcement. The company reports the signed deal on Form 8-K within four business days. The merger agreement is filed with the SEC, and it’s where the terms for your awards live.
2. Approval. Typically, shareholders vote on the deal after a proxy statement, and it needs a majority of the outstanding shares. Some buyers make a tender offer instead. The SEC’s rules keep a tender offer open at least 20 business days, and since April 2026 the SEC allows as few as 10 when the offer comes under a signed merger agreement, is for all of the shares and pays only cash at a fixed price. In a Delaware company, the merger can then close without a vote.
3. Antitrust review. Larger deals are filed with the FTC and the Justice Department. The parties then wait 30 days, or 15 for a cash tender offer, unless the agencies end the wait early or ask for more information.
4. Other approvals. The agreement lists anything else that has to happen first, such as approvals from other regulators.
5. Closing. Each share becomes the right to receive the cash price. The buyer funds a paying agent, which pays shareholders after the closing.

Until the close, the stock typically trades below the deal price. The gap reflects the wait and the chance the deal closes late or not at all. Your company’s filings say when it expects the deal to close.

A cash deal is a taxable sale, and each piece is taxed its own way.

• Shares you own. You have a capital gain or loss, the cash minus your cost basis. It’s long term if you held the shares more than one year. Shares from an ESPP or from exercised incentive stock options can also carry ordinary income, as below.
• Cash for RSUs and nonqualified option gaps. This is pay. Your employer withholds tax on it. For federal tax, employers can use a flat 22%, and must use 37% on the part above $1 million in a year (IRS Publication 15, 2026). If your top bracket is higher, you may owe more with your return.
• ESPP and ISO shares. The holding periods for Section 423 ESPP shares and for shares from exercised incentive stock options are more than two years from the grant and more than one year from the purchase or exercise. Shares cashed out in the deal before then count as a disqualifying disposition, including ESPP shares from a final purchase before closing. That changes how much of the payment is ordinary income.
• Incentive stock options you haven’t exercised. Cash paid to cancel them in the deal is a taxable payment under the Treasury rules on incentive stock options, not a sale of ISO shares.
• Awards that keep vesting. Unvested awards that become the buyer’s RSUs or cash awards are taxed later, as they vest or pay.

A big payout can also call for estimated tax payments during the year, so the withholding may not be the end of it. The IPO lockup guide explains how the safe harbors work, and the RSU tax gap estimate on this site shows what the gap may be on this year’s vests.

Some deals come with retention bonuses for people the buyer wants to keep, and severance terms for people who are let go. Each one says what it requires, like staying a set time, and what happens if you’re let go before then.

Senior people should also know about Section 280G. It can apply if you’re an officer, own more than 1% of the company’s stock, or are among the highest paid, meaning the top 1% of employees or the top 250, whichever group is smaller, above a set pay level. Your base amount is your average taxable pay over the five years before the deal. When the payments tied to the deal reach three times that amount, the part above one times it faces a 20% excise tax on top of income tax. The company also loses its tax deduction for it. Private companies can avoid it with a vote of more than 75% of shareholders. Public companies can’t use that vote. I wrote a letter on it, The 20% Golden Parachute Tax and Who It Applies To.

If you have deferred compensation, your plan decides whether it pays at the deal. It can pay at a change in control only if the plan says so and the deal meets the IRS definition of one.

Your company’s insider trading policy still applies until the deal closes. So do its trading windows, and the rule against trading on news that hasn’t been made public.

If you own shares, there are two basic paths. You can sell in the market before the close, typically below the deal price, or hold and receive the deal price at closing. Selling early gives up the gap to the deal price. Holding keeps you exposed if the deal closes late or falls apart. The two paths can also put your gain in different tax years, and change which shares are long term.

Which path fits depends on your taxes, how much of your net worth is in this one stock, and what you need the money for.

1. What do you hold today, and what does the merger agreement say happens to each kind?
2. Which awards pay at closing, and which turn into new awards that keep vesting?
3. If you’re let go after the deal, do your new awards speed up, and for how long does that protection last?
4. Do you have a retention or severance offer, and what does it require of you?
5. Could Section 280G apply to you?
6. What’s your cost basis for each lot, and which shares will be long term at closing?
7. How much tax will be withheld from the payout, and how much more might you owe?
8. Do you need estimated payments for the year the deal closes?
9. If you have ESPP shares or incentive stock options, what happens to them in the deal?
10. When is your next trading window, if you want to sell before the close?
11. Where will the cash go, and what do you need it for in the next few years?
12. Who’s on your team for this decision?