When a takeover or buyout is announced and you are the holder of some stock, what is the best action? Sell immediately or wait for the acquisition?
The answer is…
… there is no right answer. The actual answer is: It Depends.
The factors determining what is the best actions to take is unknowable.
Sometimes an offer price is later raised, or a competing higher offer is made, which means it is better to wait.
Sometimes an offer is withdrawn and the previously-announced price is lost and the stock price declines.
Sometimes it is better to just let the acquisition come, in the case where the latest stock price was less than the announced acquisition price. Since it is common for the acquisition price is somewhat higher then the open market price before the announcement.
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Without delving into all the missteps, the question remains. Sell now before the close of the acquisition, or hold out for the payout? In this case, it is likely no competing offer will arise, but since the future in unknowable, the sell-or-hold choice is ours to make as we see fit.
This is a case for not worrying about getting the best out of a “bad” situation. No matter what happens, there are always other possibilities. Coulda, woulda, shoulda is deadly to one’s peace of mind, and comparison is the thief of joy.
What is the purpose of investing? In the long run, it is to provide for financial stability and overall emotional independence from worry. We all make our choices and we live our lives. There is no magic wand to tell us which path is best.
As a result, I will wait until the acquisition completes. Especially since the offer price is more than the market trading price.
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