How much will a stock be worth after a merger?
"For the first and last questions, I can do this multiple ways.  For the middle question, I'll just make up values.  If you want different ones, you will have to redo the math.   I am going to assume that you participate in the merger exchange, swapping your share for their offer.   If you own one share, it depends how they handle fractional shares.  Your original one share of ABC can be worth either one share of XYZ or 1.05 shares of XYZ.  If you get one share, you typically get an additional $.80 cash to make up for the fractional share.   You might ask why you don't just get $20 cash and one share of XYZ.  Consider the case where you own twenty shares of ABC.  Then you'd own twenty-one shares of XYZ and $384.  No need for fractional shares.   Beyond all this though, the share value of XYZ is not set autocratically.  The shares might be worth $16, $40, or $2 after the merger.  If both stocks are perfectly valued and the market is aware of that value, then it will depend partially on the number of shares of each.   For example, if we assume there are 10,000 shares of ABC and 50,000 shares of XYZ (including the shares paid for ABC), then their initial market values are $320,000 for ABC and $800,000 for XYZ.  XYZ is paying $360,000, so its value drops to $440,000.  But it is gaining ABC, which is worth $320,000.  Net value now is $760,000 or $15.20 per share.   This has assumed that the shares transferred from XYZ to the shareholders of ABC were already included in the market value.  This may mean that the stock price was previously $20 or so with almost 40,000 shares in circulation.  Then they issued new shares, diluting the value down to $16.  We could start at 50,000 shares at $16 and end up with 60,000 to 60,050 shares at $13.332 to $13.333 per share.  Then XYZ is really only paying $326,658.31 for ABC.  That's a premium of only $6,658.31 for ABC and gives a final stock value of $13.222 per share.   The problem though is that in reality, there is no equivalent of perfect value.  So I say again that the market value might be $15.20 (the theoretic answer that best fits the question given the example quantities of shares), $13, $20, or something else.  It will depend on how the market perceives the deal.  Is the combined company worth more or less than the sum of its parts?   And beyond this, you will have $19.20 to $20 in cash in addition to your XYZ share (or 1.05 shares).  Assuming 1.05 shares, that would be $15.96 plus the $19.20--that's $35.16 total in theory or anything from $19.20 up in practice.  With the givens, the only thing of which you can be sure is the $19.20 cash.  The value of the stock is up in the air.   If XYZ is only privately traded, this is still true.  The stock is worth the price that someone will pay for it.  The ""someone"" is just more limited with privately traded stocks." It depends.  If you accept the offer, then your stock will cease existing.  If you reject the offer, then you will become a minority shareholder.  Depending on the circumstances, you could be in the case where it becomes illegal to trade your shares.  That can happen if the firm ceases to be a public company.  In that case, you would discount the cash flows of future dividends to determine worth because there would be no market for it. If the firm remained public and also was listed for trading, then you could sell your shares although the terms and conditions in the market would depend on how the controlling firm managed the original firm. If this is a one to one share exchange with added cash to make up the difference in value, you're getting 1 share of XYZ plus $19.20 in cash for each share of ABC.   They calculated the per share price they're offering ($36) and subtracted the value of XYZ share at the time of the offer ($16.80) to get the cash part ($19.20).   The value of XYZ after is subject to investor reaction.  Nobody can accurately predict stock values.  If you see the price dropping, owners of XYZ are selling because they feel that they no longer wish to own XYZ.  If XYZ is rising, investors feel like the merger is a positive move and they are buying (or the company is buying back shares). Bottom line is the cash is a sure thing, the stock is not.  You called it a merger, but it's actually a takeover.  My advice is to evaluate both stocks, see if you wish to continue owning XYZ, and determine whether you'd rather sell ABC or take the offer.  The value of ABC afterwards, if you decline the offer, is something that I cannot advise you on.
Imagine that I own 10% of a company, and yesterday my portion was valued at $1 Million, therefore the company is valued at $10 Million.  Today the company accepts an offer to sell 1% of the company for $500 Thousand: now my portion is worth $5 Million, and company is worth $50 Million. The latest stock price sets the value of the company. If next week the news is all bad and the new investor sells their shares to somebody else for pennies on the dollar, the value of the company will drop accordingly. "Will the investment bank evaluate the worth of my company more than or less than 50 crs. Assuming the salvage value of the assets of 50 crs (meaning that's what you could sell them for to someone else), that would be the minimum value of your company (less any outstanding debts). There are many ways to calculate the ""value"" of a company, but the most common one is to look at the future potential for generating cash.   The underwriters will look at what your current cash flow projections are, and what they will be when you invest the proceeds from the public offering back into the company.  That will then be used to determine the total value of the company, and in turn the value of the portion that you are taking public. And what will be the owner’s share in the resulting public company? That's completely up to you.  You're essentially selling a part of the company in order to bring cash in, presumably to invest in assets that will generate more cash in the future.  If you want to keep complete control of the company, then you'll want to sell less than 50% of the company, otherwise you can sell as much or as little as you want." "An important thing that many people fail to realize is that the number of shares outstanding in a stock, times the current market price of those shares, does not represent anything related to the total value of those shares.  If a company has one million shares outstanding and its total value is $10 million, then the real worth of each share is $10.  If few people feels like buying or selling, but a few people think the company is worth $50 million and offer $50/share, that could raise the market price to $50/share, but it wouldn't mean that the company became worth five times as much; it would merely mean the stock was overpriced. If, after the price went to $50/share, all the owners of the stock put in stop-loss orders at $45.  Note that the real $10/share ""real value"" of their stock would never have changed.  If the people who thought the stock was worth $50 decided to get out of the market, and nobody else was willing to offer more than $10, that would instantly drop the price to $10.  The fact that a million shares of stock have stop-loss orders at $45 wouldn't magically generate buyers for those stocks at that price.  Indeed, unchecked stop-loss orders would have the reverse effect, since many people who would have been willing if not eager to buy the stock if it had been available for less than $10/share would instead be trying to sell it below that price. It's too bad people think that the number of shares outstanding times the current market price represents some kind of ""meaningful quantity"".  If the present cash value of all future payouts associated with a share of stock is $10, then someone who buys a share of stock for less than that makes money off the seller; someone who pays more loses money to the seller.  Many people think they can lose money to the seller and still come out okay if the price goes higher, but what that really means is that they're hoping to find a bigger sucker--a game where it's guaranteed that some people will have losses they don't recoup." "The textbook answer would be ""assets-liabilities+present discounted value of all future profit"".  A&L is usually simple (if a company has an extra $1m in cash, it's worth $1m more; if it has an extra $1m in debt, it's worth $1m less). If a company with ~0 assets and $50k in profit has a $1m valuation, then that implies that whoever makes that valuation (wants to buy at that price) really believes one of two things - either the future profit will be significantly larger than $50k (say, it's rapidly growing);  or the true worth of assets is much more - say, there's some IP/code/patents/people that have low book value but some other company would pay $1m just to get that. The point is that valuation is subjective since the key numbers in the calculations are not perfectly known by anyone who doesn't have a time machine, you can make estimates but the knowledge to make the estimates varies (some buyers/sellers have extra information), and they can be influenced by those buyers/sellers; e.g. for strategic acquisitions the value of company is significantly changed simply because someone claims they want to acquire it. And, $1m valuation for a company with $500m in profits isn't appropriate - it's appropriate only if the profits are expected to drop to zero within a couple years; a stagnant but stable company with $500m profits would be worth at least $5m and potentially much more." If you look at the value as a composite, as Graham seems to, then look at its constituent parts (which you can get off any financials sheet they file with the SEC): For example, if you have a fictitious company with: Compared to the US GDP (~$15T) you have approximately: Now, scale those numbers to a region with a GDP of, say, $500B (like Belgium), the resultant numbers would be: It is possible to figure out the next price. Just not for Joe Average. A stock exchange has a orderbook. This has two sides. One side has alle the buyers, how many shares they want, and what they are willing to pay. The other side has all the sellers, how many shares they got, and what price they are willing to accept. If any buyers and sellers match up, their orders are executed, money and shares are exchanged, everyone is happy. So the current asking price (the price you have to pay, to get some shares) is currently 12.46$. Let's say you want 6000 shares, for any price. The orderbook now looks like this: Your order is executed, you get 6000 shares for a total of 74,761$ (5900 * 12,46 + 100 * 12,47$). The order book now looks like this: The new asking price is 12.47$. Congrats, you knew the price in advance. Of course this is simplified, there are millions of entries on both sides, thousands of trades happen every millisecond and you'll have to pay the stock exchange a lot of money to give you all this information in real time.  That's what high frequency traders are doing. They use highly specialised computer systems to exploit differences in stock exchanges all over the world. It's called arbitage. They have to be faster than the other guy. This race has gone on for a few years now, so that the limiting factor starts to become the speed of light. YOU are not going to benefit, or else you would not be asking questions on PERSONAL finance :) "I bought 1000 shares of Apple, when it was $5. And yet, while the purchase was smart, the sales were the dumbest of my life.  ""You can't go wrong taking a profit"" ""When a stock doubles sell half and let it ride"", etc.  It doubled, I sold half, a $5000 gain. Then it split, and kept going up. Long story short, I took gains of just under $50,000 as it rose, and had 100 shares left for the 7 to 1 split.  The 700 shares are worth $79,000. But, if I simply let it ride, 1000 shares split to 14,000. $1.4M. I suppose turning $5,000 into $130K is cause for celebration, but it will stay with me as the lost $1.3M opportunity.  Look at the chart and tell me the value of selling stocks at their 52 week high. Yet, if you chart stocks heading into the dotcom bubble, you'll see a history of $100 stocks crashing to single digits. But none of them sported a P/E of 12." "What will happen if the stock price just continues to decline?  Nothing. What would happen if folks just stop trading it? Nothing. What if the company goes private? Then they will have to buy you out based on some agreed upon price, as voted by the board and (potentially) approved by the shareholders. Depending on the corporation charter, the board may not be required to seek the shareholders' approval, but if the price the board agreed upon is unreasonable you can sue and prevent the transaction. How do they decide the fair value of the outstanding stocks? Through a process called ""valuation"", there are accounting firms which specialize in this area of public accounting." The worth of a share of stocks may be defined as the present cash value of all future dividends and liquidations associated therewith.  Without a crystal ball, such worth may generally only be determined retrospectively, but even though it's generally not possible to know the precise worth of a stock in time for such information to be useful, it has a level of worth which is absolute and not--unlikely market price--is generally unaffected by people buying and selling the stock (except insofar as activities in company stock affect a company's ability to do business). If a particular share of stock is worth $10 by the above measure, but Joe sells it to Larry for $8, that means Joe gives Larry $2.  If Larry sells it to Fred $12, Fred gives Larry $2.  The only way Fred can come out ahead is if he finds someone else to give him $2 or more.  If Fred can sell it to Adam for $13, then Adam will give Fred $3, leaving Fred $1 better off than he would be if he hadn't bought the stock, but Adam will be $3 worse off. The key point is that if you sell something for less than it's worth, or buy something for more that it's worth, you give money away.  You might be able to convince other people to give you money in the same way you gave someone else money, but fundamentally the money has been given away, and it's not coming back. That's all? What's the total shares outstanding? It's on thing is it's 100,000 and another if it's 10,000,000. What's the capitalization? If you don't know, check tech crunch and/or read the about section of your website.  Having a bit of experience, my guess would be 10,000,000 (or much much more). Series A capitalization usually goes off at $1.  If you are not in a management, sales, production or technology role .. you may not benefit much from the growth. So if you want to, watch your internal job postings and try to move up. I've had luck finding old stock information in the Google scanned newspaper archives. Unfortunately there does not appear to be a way to search exactly by date, but a little browsing /experimenting should get what you want. For instance, here's a source which shows the price to be 36 3/4 (as far as I can read anyway) on that date. A quick search showed me that UEP merged into Ameren on Dec 31, 1997, and Ameren still exists today.  So I took a look at Ameren's Investor Relations website.   Unfortunately, they don't provide historical stock prices prior to Ameren forming, so starting with 1998.  However, I've had good luck in the past emailing a company's investor relations contact and asking for data like this that isn't on the website.  It's reasonably likely they'll have internal records they could look it up within. "Most companies get taken over eventually. More to the point, ANY company with a public float over 50 percent that's large and viable enough to fall on people's radar screens will get taken over if its stock price is ""too low"" relative to its long term prospects.  It is the possibility of a takeover, as much as anything else, that bolsters the stock prices of many companies, particularly those that don't pay dividends. In essence, the takeover price is just one large liquidating ""dividend.""" "Market caps is just the share price, multiplied by the number of shares. It doesn't represent any value (if people decide to pay more or less for the shares, the market cap goes up or down). It does represent what people think the company is worth.  NAV sounds very much like book value. It basically says ""how much cash would we end up with if we sold everything the company owns, paid back all the debt, and closed down the business? "" Since closing down the business is rarely a good idea, this underestimates the value of the business enormously. Take a hairdresser who owns nothing but a pair of scissors, but has a huge number of repeat customers, charges $200 for a haircut, and makes tons of money every year. The business has a huge value, but NAV = price of one pair of used scissors." Stock A last traded at $100. Stock A has 1 million shares outstanding. No seller is willing to sell Stock A for less than $110 a share. One buyer is willing to buy 1 share for $110. The order executes. The buyer pays the seller $110. Stock A's new price is $110. An $110 investment increased the market cap by $10 million. Neat trick (for all who own Stock A).