What happens to your stock if a company goes private?

Asked 4 years ago

When a stock market company goes private, does my existing shares become null and void, or do I have to sell it?

Simon Mugo

Sunday, April 11, 2021

When a company goes private, the existing investors are usually compensated for the shares they owned in the company while it was still listed.
In most cases, the new owners usually pay more to acquire your shares since it does not make sense for a company to go private (be acquired) at the price it was trading at on the stock exchange.
Thefore, let's say that the company's shares were at $10 when a bidder expressed interest in the company and offered to pay $15 a share for all outstanding shares. You would receive $15 for each share you own in the company.
However, not all acquisitions are an all-cash deal, as shown above. Some acquisitions involve exchanging shares where the acquiring company issues new shares to the acquired company's existing shareholders, also known as a share swap.
Share swap deals typically occur in scenarios where the acquiring company's shares are worth more than your shares. 