Merger Acquisition Hot Topics

Stock Swap

Merging? Trading stock with another company for the merging process is one way to combine the business financially. Basically, this is the one way for an acquisition to pay for the company acquired. This will combine the two companies into one larger business. The best scenario for a stock swap is the merger of equals.

Business to business stock swapping and merger transaction can be complex. Contact our Merger Acquisition Lawyers to handle any legal transactions.

Some benefits of stock swapping include:

• Trading of stock
• Enhancement of portfolio
• Reducing taxes
• Increasing profits

In a stock swap, the shareholders of the new entity receive a particular number of shares from the acquiring corporation’s stock matched for their numbers of stock held. Most of the time, there is a grace period where the shareholders must wait before they can sell the acquired stock. Some employers let you trade company stock you already own to acquire option stock.

Stock swap is also used to pay off accumulated debt. The only time this may not be done is if the company has declared bankruptcy and the debtor must wait until the creditor is out of bankruptcy court.

During the stock swap, there are two situations that may take place. They are as follows:

• The two companies become one
• The two companies slip into two separately listed stocks even though they became one

Business to business stock swapping and merger transaction can be complex. Contact our Merger Acquisition Lawyers to handle any legal transactions.