What happens to the stock when a big company buys a little company?

Does the little company stock swap for big company stock? Does the big company stock go up? I know of a small company rumored to being purchased soon by a big company. Which one should I buy stock in ahead of time?|||The shareholders of the smaller company may be offered by the larger company:





1) A certain amount of cash per share (normally higher than the price at which the stock was previously trading at BEFORE the purchase of the company was announced.





OR





2) A certain number of shares in the larger company in exchange for a certain number of shares of the smaller company.





The stock price of the larger company may actually go down some when the deal is announced.|||You want to own shares of the smaller company before it is bought out. It goes up a lot.

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|||Generally, you would want to buy the stock of the "little" company, the one being acquired.