My Company Was Acquired - Now What?
Navigating a Potential Windfall
Acquisitions and consolidation have increased dramatically in recent years, especially in the pharmaceutical industry. The transition can be scary for employees of acquired companies as many things seem unknown and outside of one’s control.
While folks may not have a full grasp on their employment picture over the short term, as consolidation means many things to many different people, one area of worthwhile focus is the effect of ownership change on personal finance and retirement planning.
How does this acquisition affect your current retirement plan?Major transitions are a great time to take another look at everything and see how you can solidify your finances, despite short term uncertainty.
The biggest change is likely in the area of equity compensation as acquisition can trigger a host of new developments and render prior assumptions invalid. Here are a few action steps you can take once acquisition seems imminent:
Take a full inventory of your equity positions. Track all available information to understand how the acquisition might change fair market value, vesting schedules, and tax consequencesof various equity positions (options, RSUs, etc.). For example, acquisition could trigger immediate vest of all unvested positions at a premium to current share price. If that’s the case, you need to understand how to efficiently manage the windfall.
Review how this affects your short-term finances. Acquisition can present short term volatility in household finances—just be sure that you have adequate reserves in the event of a temporary lapse in income during potential transition.
Run all current changes against your long-term retirement plan. Anyone over 45 should have a first draft of a formal retirement plan in place. Many assumptions in that plan may need updating.
As the acquisition progresses towards a close more, necessary data will become available to fill in assumptions—but it’s always best to start this process as early as possible and fill in the gaps with accurate data.
An ounce of planning is worth a pound of remediation—or in other words, the earlier you start planning the better results you’ll have. If you’re unsure of your options, schedule a call today.
If you need help with any of the above, please schedule an intro call.
Disclosure: Claro Advisors, LLC ("Claro") is a registered investment advisor with the U.S. Securities and Exchange Commission ("SEC"). The information contained in this post is for educational purposes only and is not to be considered investment advice. Claro provides individualized advice only after obtaining all necessary background information from a client. Please contact us here with any questions.
About the Author
Robert Dockendorff is a Vice President of Claro Advisors, LLC. Bob serves as an Advisor at Claro, where he helps clients achieve financial goals through careful analysis and the development of long-term plans that encourage consistent, achievable actions. Bob also enjoys sharing helpful financial planning insights on his blog and is an active contributor on Investopedia's Advisor Insights website.
Prior to joining Claro, Bob was a Senior Associate Financial Counselor at The Colony Group, supporting a team of financial counselors with research and analysis on all areas of wealth management and financial planning for high net worth individuals. He also focused on the implementation of investment, estate, and tax planning tailored to the specific goals of diverse clients. Prior to joining The Colony Group, Bob worked as a Tax Associate at the international accounting firm Ernst & Young, where he conducted tax research for multi-national businesses. Bob received a Bachelor of Arts in Philosophy from the University of Vermont. After college, Bob earned a Juris Doctor from Suffolk University Law School, Cum Laude, and an LL.M in Taxation from Boston University Law School. Bob has previously passed the FINRA Series 65 and the MA Life and Health Insurance Producer Exam. In his spare time, Bob enjoys the mountains, the beach, and playing golf. Bob resides in Hingham, MA with his wife Caitlin and two sons, Charlie and Tommy.