What happens when a company is sold

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1

I’m buying stocks in a green energy company but I’m worried they could be sold in the future what would happen to my shares?

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2

Its quite a complicated question to answer but there are broadly three options:

  1. The company is bought in cash. In which case you’re given the value (buying price) back into your account as cash. You lose the shares and are given cash and any economic interest in the company.
  2. The company is bought for shares. in which case you’re given shares in the company that is buying your company. Typically but not always, the acquiring company is listed on the stock market so you gain shares in the purchasing company that are equal to the value of the agreed purchasing price. Your company becomes a subsidiary of the purchasing company but you have economic interest in the purchasing company. A high profile example of this would be Sirius Minerals.
  3. A combination of option 1 & 2 is also possible.

Its a complicated topic because there are lots of BS words/terminology in the M&A world but largely (I am simplifying) it, the two options above are the ones that happen in a vast majority of cases.

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3

Ok that’s helpful thank you. I thought maybe my stock could go to oblivion even though it performs well and being sold for that reason lol.

4

No that won’t happen. By UK law all common share (and therefore shareholders) are equal. Eg the common shares that you hold are just as valuable as the chairman of the board.

If a company is sold then you are entitled to the compensation in the same way.