The Stock You Never Chose.

The first time you open your brokerage app after an all-stock deal closes, your company is gone. Its ticker has been replaced by the buyer’s. The share count looks wrong until you remember the exchange ratio, and there may be a small cash payment for the fraction of a share nobody could hand you.

Think about how much you know about the company you’ve worked for. You know its products, its rivals, which launch slipped, and what the CFO really meant on the last earnings call. Now think about how much you know about the company you own this morning. Usually it’s a press release and a logo. And what you own now is a slice of everything the buyer owns and owes, including divisions you haven’t followed and debts you haven’t looked at.

It didn’t start at closing, either. In many stock deals the exchange ratio is fixed when the deal is announced, so from that morning on, your company’s stock tends to move with the buyer’s. In practical terms you’ve been holding the buyer since the all-hands. That part rarely makes the slide.

Then nothing forces a decision. Many all-stock deals are built so the swap itself isn’t taxed when it happens, and the shareholder disclosure document usually says whether yours is expected to work that way. Your converted grants keep vesting in the buyer’s stock. No check arrives. That’s how a stock no one in your house picked can become one of the biggest things you own without a single decision being made.

Some deals pay cash instead. Imagine yours had, and the full value of those shares landed in your account as cash the morning after closing. How much of the buyer’s stock would you go out and buy with it? Whatever your answer is, the gap between that number and what you’re holding right now is the decision the deal skipped.

The answer might be all of it. Plenty of buyers are exactly the kind of company you’d want to own, and holding can be the right call. Selling has its own costs, taxes among them, and your new employer’s trading rules may limit when you’re allowed to sell. What matters is that the answer comes from you, with your own numbers in front of you.

Keep your old cost records, too. In a tax-free swap your original cost usually carries over to the new shares, and it’s worth having your CPA confirm your brokerage recorded it correctly. Look at what you’ll own a year from now as well, because converted grants can add more of the same stock as they vest or are exercised.

This is the second letter in a short series on what a deal does to your money. Tuesday is about a question people in a deal tend to keep to themselves. Should you even stay?

Talk Tuesday.

— Mateo

P.S. If your company is in the middle of a deal right now, there’s a deal checklist at bfawealth.com/deals.