Tech M&A is back, and it's moving fast.Capital One closed its $5.15 billion acquisition of Brex in April. Across the sector, tech M&A deal value climbed to $150 billion, up 31% year-over-year, and the trend is toward fewer, bigger deals. Acquirers are also scooping up smaller startups for talent and tech, and many teams of under 100 employees are landing $100M+ exits. So here's the question: if your company got acquired tomorrow, would you actually know what happens to your options? Many employees don't - and the deal documents move fast.
Every acquisition pays for your equity one of three ways: all cash, all stock, or a mix. Each one changes what you actually receive, when you receive it, and how it's taxed.
All-cash deal
Your vested options typically get a check based on (deal price per share − your strike price) × your shares. The math is clean: a single payout, taxed in the year you receive it.Unvested options are where it gets messy. Some deals accelerate them on close (single-trigger), some convert them into a deferred cash schedule that pays out only if you stay at the acquirer for a defined period, and some disappear with no replacement.
Stock-for-stock deal
Your options convert into options on the acquirer's stock at a defined exchange ratio. You don't get cash on day one, you get new equity in a different (usually larger, often public) company. Your vesting schedule typically carries over to the new options. If the acquirer is public, you now hold options in a tradeable stock you can model in real time. That clarity is the upside; the downside is you may need to wait through a lockup period before you can sell.
Mix (cash plus stock)
You get a slice of each. This is the most common structure for larger deals. The Brex transaction is a real-world example: $2.56 billion in cash plus roughly 10.6 million Capital One shares.The mix matters for tax planning. The cash portion lands in the year you receive it; the stock portion creates a new basis you'll deal with when you eventually sell. Each piece follows its own timeline.
The merger agreement - not your original grant - controls what happens. Your offer letter and equity plan describe what could happen; the deal documents say what actually executes.
A few things tend to catch people off guard:
Acceleration may not be automatic.
"Double trigger" acceleration only vests your unvested shares if the acquirer terminates you within a window (often 12 months) after close. If you stay, you keep vesting on the original schedule. If you quit voluntarily, you usually walk away from the unvested portion.
ISO tax treatment can break.
If your ISOs are cashed out within one year of exercise (or two years of grant), you lose long-term capital gains treatment. The cash payout becomes ordinary income - which can move you from a roughly 15–20% federal rate into 30%+ territory, depending on your bracket.
Underwater options get canceled.
If the deal price per share is below your strike, your vested options can be canceled with no proceeds. This happens more often in down-round acquisitions than people expect.
A chunk of your payout may be held back.
Many deals lock 10-20% of proceeds in escrow for 12-24 months to cover indemnification claims. You see the headline number; you may not see all of it on day one.
Once the announcement hits, you often have weeks - not months - to make decisions. Move through this fast:
1. Get the equity treatment FAQ from HR or legal. Don't rely on your original grant agreement.
2. Pull your vested count. Take a dated screenshot from your equity portal on announcement day.
3. Identify the structure (cash, stock, or mix). This drives every downstream decision.
4. Estimate your tax exposure. For ISOs especially, the difference between "exercised over a year ago" and "exercised last week" can be a six-figure delta.
5. Decide on a pre-close exercise. If timing and budget allow, exercising before close may convert ordinary income into long-term capital gains down the line.
6. Read the escrow and earnout terms. Know what you'll actually receive - and when.
7. Compare any retention package to your acceleration value. Acquirers often offer cash bonuses tied to staying 12-24 months - Run the math.
You can't change the deal terms. You can change how you respond to them.
Learn more about how Equitybee can help you unlock your equity.
Concentration risk - when most of your net worth is locked up in one company's stock, what do you actually do about it?
Sources:
EY: US M&A activity insights: March 2026
Capital One
Crunchbase
Equitybee does not provide tax or financial advice. Always consult a qualified professional about your specific situation. Equitybee executes private financing contracts (PFCs), which allow an investor a percentage claim to employee stock options upon a liquidation event, with no guarantee of such an event, and is subject to the terms of your company options agreement. Entering into a PFC could limit your profits; you should consult with your own professional advisers prior to entering into PFCs. Funding is not guaranteed. PFCs are brokered by EquityBee Securities, LLC, member FINRA