Archive · 11 Sep 2026
What Happens to Employee Esops After a Valuation Markdown
Esops give employees the right to buy company shares, usually at a fixed price.
Employees first receive the options, then earn them over time through vesting.
They can later buy the shares during the exercise period.
If the company is acquired, employees who already bought shares may receive shares in the acquiring company.
Employees with vested options that they have not exercised may receive new options, or their options may be cancelled.
Unvested options may also be replaced or cancelled, depending on the deal and the company’s rules.
If the company’s value falls below the price an employee paid, the investment may be worth less than it cost.
Employees may also owe tax when exercising options and when selling the shares for a profit.
Unacademy was acquired by upGrad on September 1 through a $206 million share swap.
The deal valued Unacademy far below its August 2021 peak valuation of $3.4 billion.
Exercised shares are generally exchanged for acquirer shares according to the transaction terms.
Vested but unexercised and unvested options may be rolled over, replaced, cancelled, or terminated.
Esops are taxed at exercise, while later profits may be taxed as capital gains.
- Who
- Unacademy employees and shareholders, and acquirer upGrad.
- What
- upGrad acquired Unacademy through a share swap at a $206 million valuation, affecting the treatment and value of employee stock options.
- When
- The acquisition took place on September 1; Unacademy’s peak valuation was in August 2021.
- Where
- The articles discuss the transaction and applicable Indian Esop and tax rules.
- Acquirer
- upGrad
- Target company
- Unacademy
- Transaction date
- September 1
- Acquisition structure
- Share swap
- Deal valuation
- $206 million
- Unacademy peak valuation
- $3.4 billion in August 2021
- Exercise tax basis
- Fair market value on exercise minus the employee’s exercise price