Just to add a little bit more detail to the answer
Post# of 82672
(Total Views: 911)
Posted On: 06/13/2018 7:04:45 PM
Just to add a little bit more detail to the answers to the query about what happens when a company is bought out, for those who haven't been through this much yet -
re the price jump: it's true that the price always jumps up to near the buy-out price. Many long term holders take their money and move on, while new buyers come in to lock in a sure percent or two for a short hold of known duration. (because there is always a lag between the announcement and the actual transaction. Also, it goes by holders of record, so buying the last day or two may be a problem, (which is why transactions are sometimes frozen in that transition zone. Another thing to consider is that if the market thinks that a rival buyer may come into the picture, then the share price can go higher than the announced buy-out, until the buy-out is finalized. Don't hit your sell button til the dusk settles!
re stock vs. cash. If a private company is the buyer, the deal will be all cash (your shares are cancelled and you get the money in your account, as others have explained). Public companies sometimes do the buy-out with newly issued shares, but the current market value of those shares will be more (usually) than the previous value of your shares, or some cash and some shares. That is, you usually come out ahead. You then can sell or hold those new shares as you wish. In this case, the share price of the buying company often dips down a little (with many people selling and an increase in the shares issued), so it often pays to hold the new shares for a while, especially if you think that (in this case) Strikeforce's contribution to the new company's bottom line may be significant. That could well be the case here, unless the buyer is a huge company, in which case the impact may be minimal.
With apologies to those who already knew this ...
Erie
re the price jump: it's true that the price always jumps up to near the buy-out price. Many long term holders take their money and move on, while new buyers come in to lock in a sure percent or two for a short hold of known duration. (because there is always a lag between the announcement and the actual transaction. Also, it goes by holders of record, so buying the last day or two may be a problem, (which is why transactions are sometimes frozen in that transition zone. Another thing to consider is that if the market thinks that a rival buyer may come into the picture, then the share price can go higher than the announced buy-out, until the buy-out is finalized. Don't hit your sell button til the dusk settles!
re stock vs. cash. If a private company is the buyer, the deal will be all cash (your shares are cancelled and you get the money in your account, as others have explained). Public companies sometimes do the buy-out with newly issued shares, but the current market value of those shares will be more (usually) than the previous value of your shares, or some cash and some shares. That is, you usually come out ahead. You then can sell or hold those new shares as you wish. In this case, the share price of the buying company often dips down a little (with many people selling and an increase in the shares issued), so it often pays to hold the new shares for a while, especially if you think that (in this case) Strikeforce's contribution to the new company's bottom line may be significant. That could well be the case here, unless the buyer is a huge company, in which case the impact may be minimal.
With apologies to those who already knew this ...
Erie
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