When I left a private company I purchased some of my options so I own common stock. The company has announced a merger with a publicly traded company but the legal agreements appear to value preferred stock only. Is it possible my common stock is now worthless?
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That will be negotiated as part of the merger agreement. Typically your private stock will be replaced by shares of the combined company with equivalent value as a percentage of the combined company.
keshlam
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No, it is not possible that your common stock is now worthless, unless the value of the company being acquired was already worthless (for example, if the private company was going bankrupt and got bought by a company that needed to take responsibility for significant debt that was owed).
It is not legal to divert value away from certain classes of shareholders. Common shares represent the net value of the company, after paying off all debt and preferred shares [this is why they are called 'preferred' shares; they get first priority in the order of allocating value, either in liquidation or via dividends]. So, as long as the company was worth anything, your old shares were worth something, and if your old shares were worth something, it would not be legal to destroy that value.
You should reach out to your old company via official shareholder channels, and confirm how you will receive compensation. As mentioned already by Keshlam, quite likely you will get shares of the public company, to replace your old shares.
Grade 'Eh' Bacon
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