If I hold stock in a company, then my company acquires that company, the stock rises, and I liquidate my position in it after 6 months or whatever the cool-down period is, is this considered insider trading?
If you hold stock in company A, and your current company B acquires company A, that's not insider trading if you already owned the stock in company A before you had any information that company B was going to make that decision.
It is, however, a conflict of interest for you to be involved in company B's acquisition of company A (e.g. influencing company B to buy company A), and might even rise to the level of a breach of your fiduciary duty to company B.
Insider trading is all about information held by "insiders", not about who owns what. So it would depend on whether you know something material and nonpublic when you liquidate your position (e.g., you know the acquisition is going terribly and the acquiring company is going to write it off).
How does management benefit from M&As? Sorry if this is a basic question. Do executives get paid based on the number of acquisitions?
Two ways:
Bonuses by juicing revenue numbers
Bigger next job by doing M&A and having really good-looking resume and interview story.
See item #6 here
https://corporatefinanceinstitute.com/resources/valuation/mo...
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If I hold stock in a company, then my company acquires that company, the stock rises, and I liquidate my position in it after 6 months or whatever the cool-down period is, is this considered insider trading?
If you hold stock in company A, and your current company B acquires company A, that's not insider trading if you already owned the stock in company A before you had any information that company B was going to make that decision.
It is, however, a conflict of interest for you to be involved in company B's acquisition of company A (e.g. influencing company B to buy company A), and might even rise to the level of a breach of your fiduciary duty to company B.
1 reply →
Insider trading is all about information held by "insiders", not about who owns what. So it would depend on whether you know something material and nonpublic when you liquidate your position (e.g., you know the acquisition is going terribly and the acquiring company is going to write it off).