Last updated: 2025-12-02
SmartInvestments - Recording Corporate Mergers, Stock Splits and Spin-Offs
SmartInvestments - Recording Corporate Mergers, Stock Splits and Spin-Offs
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- Overview
- Mergers
Overview
SmartInvestments includes
the capability to record mergers, stock splits and spin-offs for [investment
securities](/help/pro/smartinvestments/-/working/with/investment/securities). When a security record is updated to reflect any of these
corporate actions, all associated accounts, positions and transactions
and adjusted accordingly.
Note: Mergers, splits and
spin-offs can be performed on stock and mutual fund security records only.
Mergers
A merger is an acquisition or consolidation
of two or more companies in which only one of the companies survives as
a legal entity. When a merger occurs, the relevant investment securities
must be consolidated in SmartOffice.
Note: This feature differs
from the [security
record merge](/help/pro/smartinvestments/-/merging/duplicate/accounts/positions/and/securities) feature in SmartOffice, which is used to combine duplicate
or otherwise redundant security records in the system.
Recording a Merger
-
From
the [Investment
Security List](/help/pro/smartinvestments/-/searching/for/investment/securities), tag the security record of the company that was
acquired.
-
Select
Menu > Advanced
Options > Merger.
-
When
the confirmation message displays, click the Yes
button to open the merger dialog box.
The security selected in the first step is displayed in the Merge From
section.
-
In
the Merge To section, enter the ticker symbol and/or CUSIP number
of the acquiring company. To [perform
a securities search](/help/pro/smartinvestments/-/searching/for/investment/securities), click the Symbol/CUSIP
hyperlink.
-
Complete
the fields in the Merging Information field:
Merge
Date: The date that all of the shares from one security
are transferred to another security.
-
Factor:
The factor by which the current quantity will be used to combine
shares into a security. For example, when two new shares of stock
are issued for every one share currently being held (i.e., a two-for-one
merger), the factor is entered as 2:1. For a three-for-two merger,
enter 3:2. For a one-for-three merger, enter 1:3.
-
Price:
The selling price of the security specified in the Merge From
section.
-
Verify
the security and merging information. This operation cannot be undone
once it begins.
-
Click
the OK button.
When a merger is completed, the following occurs on the [Position
Transactions content links](/help/pro/smartinvestments/-/position/transactions/content/link) of all positions associated with the merged
securities:
-
A Sell transaction equivalent to a Liquidated transaction
is created as of the Merge Date for the Merge From security.
-
A Buy transaction is created for the Merge To security
as of the Merge Date.
Note: Once the merger is
recorded, SmartOffice automatically performs validation
to recalculate the position, account and contact benefits values.
Merger Example
Suppose that the user records a merger
that occurred on 5/21/2007 with a factor of 2:1. The merger would be recorded
as follows:
-
A Sell transaction is created for the Merge From security using
the merge date as the trade date. This is equivalent to a liquidation;
all shares must be sold. The last cumulative tax value is used as
the transaction amount, and the cumulative share value is used as
the number of shares to sell. Using these two pieces of information,
the price per share is calculated. The following table details the
Sell transaction.
Date
Type
Shares
CumlShare
Price
Value
CumlCost
CumlTax
2/10/2001
Buy
1,250.000000
1,250.000000
8.00
10,000.00
10,000.00
10,000.00
6/20/2002
Dividend
55.555600
1,305.555600
9.00
500.00
10,000.00
10,500.00
8/13/2005
Buy
1,000.000000
2,305.555600
10.00
10,000.00
20,000.00
20,500.00
5/21/2007
Sell
2,305.555600
8.89
20,500.00
-500.00
Note: Because the
Sell transaction liquidates the Merge From security, a liquidated date
is automatically set so that this position displays as a Closed position.
-
A Buy transaction is automatically created for the Merge To
security using the merge date as the trade date. The transaction amount,
number of shares and price depend on the factor entered. The following
table details the Buy transaction.
Date
Type
Shares
CumlShare
Price
Value
CumlCost
CumlTax
5/21/2007
Buy
4,611.111200
4,611.111200
4.45
20,500.00
20,500.00
20,500.00
The transaction's Fund Source field notes the symbol of the
Merge From security, e.g., "Merge from AAGFX."
Stock Splits
When its stock price grows too high, a
corporation may choose to "split" the stock to make it more
affordable to a broader range of investors. The split lowers the share
price and increases the share volume without affecting the overall dollar
value of shareholders' investments.
Recording a Stock Split
-
From
the [Investment
Security List](/help/pro/smartinvestments/-/searching/for/investment/securities), tag a security record.
-
Select
Menu > Advanced
Options > Stock Split.
-
When
the confirmation message displays, click the Yes
button to open the Stock Split dialog box.
-
Enter
the split date.
-
Enter
the factor. For example, to record a two-for-one split, enter 2:1.
-
Click
the OK button.
Note: Once the stock split
is recorded, SmartOffice automatically performs validation
to recalculate the position, account and contact benefits values.
Stock Split Example
Suppose
that the user records a stock split that occurred on 12/31/2000 with a
factor of 2:1. This section describes the resulting changes that occur
in SmartOffice.
-
On the security's [Price
History content link](/help/pro/smartinvestments/-/price/history/content/link), all prices recorded on or before the split
date are divided by the factor.
-
On the [Position
Transactions content links](/help/pro/smartinvestments/-/position/transactions/content/link) of all positions linked to the security,
the following takes place for transactions that occurred on or before
the split date:
The values in the Shares column are multiplied by the factor,
and the Cumulative Shares column is updated accordingly.
-
The values in the Price column are divided by the factor.
The Dollar Value column and the Cost columns remain unchanged.
Price
History Before a Split
Price
History After a Split
| Transactions Before
a Split
| Transactions After
a Split
Spin-Offs
A spin-off is a form
of corporate distribution whereby shareholders receive additional shares
of another corporation's stocks.
Recording a Spin-Off
-
From
the [Investment
Security List](/help/pro/smartinvestments/-/searching/for/investment/securities), tag a security record.
-
Select
Menu > Advanced
Options > Spin-Off.
-
When
the confirmation message displays, click the Yes
button to open the spin-off dialog box.
The security selected in the first
step is displayed in the Spin-Off From section.
-
In
the Spin-Off To section, enter the ticker symbol and/or CUSIP number
of the spin-off company. To [perform
a securities search](/help/pro/smartinvestments/-/searching/for/investment/securities), click the Symbol/CUSIP
hyperlink.
-
Complete
the fields in the Spin-Off Information section.
Spin-Off Date: The
date on which the spin-off occurred.
-
Price: The spin-off
company's price per share on the spin-off date.
-
Factor:
The ratio of shares in the spin-off company that shareholders
received for every share owned in the parent company (e.g., 2:1).
-
Click
the OK button.
When a spin-off is recorded, the following actions occur in the system:
-
If a client who owns the Spin-Off
From security does not already own the Spin-Off To security, a position
is created for that client.
-
A Buy transaction is automatically
created. The transaction's Transfer option is selected for all of
the clients holding the Spin-Off From security, using the spin-off
date as the trade date.
-
The shares of the Spin-Off From security are multiplied by the
factor to determine the number of shares of the Spin-Off To security
that clients will receive.
-
The price per share becomes the purchase price of the Spin-Off
To security. The number of shares is multiplied by the price per share
to determine the dollar value of the Buy transaction.
-
The Fund Source field of the transaction displays information
about the spin-off information, e.g., "Spin-off from AAGFX on
11/30/2004 @ $18.25 per share, factor = 2:1."
Note: Once the merger is
recorded, SmartOffice automatically performs validation
to recalculate the position, account and contact benefits values.