When a public company is taken private, what happens to employee stock options, vested or not?
Ultimately, it depends on the specific language of the plan and of the grant agreement. Typically, the options will vest upon a change of control (and going private would be considered as such). The next question is whether the options have any real value. For example, if the going private price is $10 per share and the options have a strike price of $20 per share, the options have no value other than intrinsic value if the shares increase in value before the options expire. Going private generally does not change the fact that the options are outstanding and remain outstanding until their natural expiration, but that depends somewhat on the structure of the going private transaction. An acquirer can effectively rid himself of the burden of the options by taking the company private and then doing a sale of all of the assets to a new entity. The option holders are left with options in a company that has nothing but cash and that shell would typically dissolve and distribute the cash to
