Change of control and acceleration
By Offer Unpacked · Updated
An acquisition does not automatically turn unvested equity into cash. Find the exact trigger, award treatment and approvals in the grant and plan documents.
Educational guide prepared with AI assistance. No independent legal review is claimed. How these guides are prepared.
Trace the sequence of events
Ask what the documents mean by a change of control and whether the award is assumed, replaced, cashed out or cancelled. If acceleration is mentioned, record how much accelerates and the required events. A double-trigger arrangement typically refers to more than one event, but the agreement’s definitions determine which ones.
Read any good-reason definition, notice requirement and cure period. Ask about the treatment of different award types and whether severance provisions use the same definitions. Avoid relying only on an offer-letter summary if it is subject to a later grant.
Illustrative example
A fictional offer mentions acceleration on an acquisition, while the proposed grant requires both an acquisition and a qualifying termination within a defined period.
Ask which document controls and whether remaining employed after the acquisition satisfies the condition. The headline promise and the detailed trigger may differ.
What to look for
- Acceleration mentioned without grant-document language
- A narrow good-reason definition
- No treatment of unvested awards if they are not assumed
Questions to ask
- Is acceleration single- or double-trigger?
- What happens if awards are not assumed by an acquirer?
Source and scope
IRS — Stock optionsTax background for option awards only; transaction and acceleration treatment comes from the relevant documents. Examples and preparation questions are illustrative editorial content, not conclusions supplied by the source.
Your next step
Request a written acquisition scenario from the plan administrator and review material ambiguities with counsel.