Glossary · Reading the business
Stock option
In short
The right, but not the obligation, to buy a company's stock at a predetermined price. If present in a target business, these can dilute your ownership or create future liabilities.
What it means in a deal
In an asset purchase, existing stock options are typically not a concern. However, in a stock purchase, you inherit all existing obligations. You must understand how any outstanding stock options or warrants will be handled, usually by being exercised or bought out by the seller before closing.
Related terms
Common questions about Stock option
- Does an unfunded stock option agreement trigger affiliation for SBA 7(a) size standard calculations?
- What is the difference between an asset and stock purchase in a buyout?
- What if the value of my stock portfolio (for equity injection) drops before closing?
- Can an SBA 7(a) loan be used to buy stock or passive investments?
- Does the SBA 7(a) loan program have an 'Express' option for quicker approvals?
- What documentation is required to verify equity injection funds sourced from a personal stock sale?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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