A share-for-share exchange converts holders’ existing equity into different shares — another class, entity, or public stock — as consideration in a corporate transaction.

How it works

In a stock merger, Target shareholders receive Acquirer shares at an exchange ratio (e.g., 0.45 shares of Acquirer per Target share). In reorgs, private companies contribute shares to a new holdco in exchange for holdco stock — simplifying cap tables before IPO.

SPAC mergers use share-for-share exchanges where legacy shareholders receive public company stock (sometimes plus earnouts or cash components). Tax treatment may be reorganizational or taxable depending on structure and jurisdiction.

Boards and stockholders approve charter amendments and exchange agreements. Preferred protective provisions and dissenters’ rights may apply.

Why it matters

• Founders: Exchange ratio and post-deal governance define your continued role. Legal and tax counsel are essential before signing.
• Investors: Liquidation preferences may not automatically carry into new entities — diligence maps how old rights translate.

Common mistake

Assuming exchange ratio equals headline acquisition price — preferred stacks and cash/stock mix change effective proceeds per holder.

Related ideas

• SPAC
• Change of control
• Stock vs asset M&A