When a company is acquired, it means that another company has purchased it to have control over the organization and form a single business entity. Depending upon the negotiations, the acquiring entity may end up acquiring all the assets and liabilities of the company. Also, there are high chances that few of the employees will be laid off. There is no standard or precise formula to calculate the ratio for conversion to adjust the options of the old company against the acquiring company. The conversion ratio is determined through a variety of factors, such as debt levels, dividends paid, earnings per share and profits.  Further, there are a variety of factors that can impact the employee’s equity at the time of acquisition: Exercised shares: Most of the time in an acquisition, your exercised shares get paid out, either in cash or converted into common shares of the acquiring company. Vested options: Sometimes a deal might state that any vested shares are cashed out net of the strike price, which could mean your gain is small if the acquisition price is close to the exercise price in your grant. There can also be acceleration clauses in the event of an acquisition. Vesting: Employees may also have to reach certain milestones, generally time spent at the new company before the acquirer gives them cash or stock for their prior shares. This occurs when companies want to retain specific talent. For any new options or bonuses, employees will likely get a fresh new vesting schedule or one that matches their old grant. Acceleration: There may also be accelerated vesting of options on tenure, milestones, or termination at the new company.