You’re not rich (yet)

Intro (H2) – Optional Story

Two days after her company’s acquisition was announced, a client called me with a mix of joy and disbelief.

“I think I just made a million dollars.”

She had 50,000 options. Strike price: two dollars. Deal price: twenty-two.

But after we picked through the terms? Taxes, unvested options, Alternative Minimum Tax (AMT) that would be realized from vested ISO exercises – all waiting to cut that number down. Her actual walkway was half: $500K.

Still great. But not seven figures.

With deal-making in the tech space seemingly heating up after a multi-year lull, that phone call will happen more and more.

When people imagine huge payouts from startup exits, what they forget is that how your equity gets treated matters just as much as the deal headline does.

The story the acquisition email never tells you

When companies get acquired, employee expectations balloon overnight. People hear the total deal value, multiply it by their number of shares, and immediately fire up Zillow.

But there's a problem: equity isn’t one-size-fits-all.

Your experience depends entirely on these three things:

1. The type of equity you have

2. Whether your grants are vested

3. How the deal treats those grants, and what the tax implications are

And yet, most employees go into these moments with partial context at best. They assume HR will walk them through it. Or that they’ll figure things out once the deal closes and the dust settles.

But here's what often happens:

• The deal is a stock swap and not a cash payout

• Their unvested options require a double trigger to accelerate, so there’s no pot of gold waiting for them when the deal closes.

• They face a surprisingly large tax bill because of AMT from exercised ISOs or income exposure on NSOs or RSUs.

It’s not about reading every line of the M&A agreement. It’s about knowing just enough to ask the right questions before it’s too late.

The structure of the deal shapes your outcome

Cash deals are straightforward. Your vested equity turns into cash and you pay taxes (sometimes a lot of them) right away.

Stock-for-stock deals are different. Instead of a payout, your equity converts into shares of the acquiring company. You still have ownership, but the value now rides on a different business.

Then there are mixed deals - part cash and part stock. These can offer upside and liquidity, but they also introduce complexity.

In addition to these hurdles, with any acquisition type, you may deal with partial lockups, staggered vesting, or brand new tax events.

There’s not much that favors one deal type over another. But if you don’t know which one you’re in, you can’t properly plan for what's next.

Your Next Steps – The acquisition equity checklist

If your company’s about to get acquired (or just did), here’s what you should do right now:

1. Pull your equity documentation

   Get your original grant agreements and do a full cataloging of what you have. Many companies use tools such as Carta to make this much easier.

2. Create a snapshot of your equity
   Detail your holdings. Include grant date, vesting status, type, strike price. Note what’s vested and what isn’t.

3. Work through the deal memo
   Look for how equity is handled. Are options cashed out, converted, or canceled? What’s the valuation?

4. Estimate your tax impact
   You can’t forget to factor in AMT exposure for ISOs. If the deal is valued at a large premium to your ISO strike price, there’s a good chance you’ll owe AMT tax if you want to hold for the lower long-term capital gains tax rate. Account for ordinary income if NSOs or RSUs are cashed out. Model out the different paths.

5. Evaluate post-close strategy
   Are you receiving new equity from the acquirer? Will you stay for further vesting? Are those shares liquid or are there lockups?

It might feel like you're wading into legalese, but clarity here can protect months or years of your work. There are way too many horror stories told of people in these exact situations for the first time and finding things out the hard way.

Navigating an acquisition can be complex. Simplify Wealth Planning offers personalized guidance to help you understand your equity and make informed financial decisions.

Meme of the week

Wrap-Up

If you think the biggest risk in an acquisition is missing the upside, you haven’t factored in the fine print.

This is one of those moments where speed matters less than accuracy.

Before you celebrate, hit pause. Understand what your equity really converts to. What it’s worth and when it’ll be yours.

I did a webinar last week for Moveworks employees and how to evaluate their equity in light of their acquisition by ServiceNow. It’s a fascinating case around how if you don’t play your cards right (deal specific), you might lose far more to taxes than you actually wanted to. Give the replay a watch here:

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Disclosures
Simplify Wealth Planning, LLC (“SWP”) is a registered investment adviser in Texas and in other jurisdictions where exempt; registration does not imply a certain level of skill or training.

If this e-mail refers to any client scenario, case study, projection or other illustrative figure: such examples are hypothetical and based on composite client situations. Results are for informational purposes only, are not guarantees of future outcomes, and rely on assumptions specific to the scenario (e.g., age, time horizon, tax rate, portfolio allocation). Full methodology, risks and limitations are available upon request.

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