Mergers And Acquisitions for Dummies (2011)
“In this chapter I explore the various methods that help Buyers finance the acquisition of companies, including where Buyers get the necessary capital, what exactly they’re buying, and what those transactions look like.
Exploring Financing Options To many, buying a company means an exchange of cash: Seller gets some dough, and Buyer gets the company. This transaction implicitly states that the payment is currency, to be paid now, and the price is fixed. Although that’s one way to finance a d...eal, it’s not the be-all and end-all of M&A transactions. Timing, currency, and even the amount of payment all affect a deal’s financing.
Although cash, especially the all-time favorite “cash at closing” variety, is the preferred payment, it’s not the only way to pay for a company. A better word for what Buyer pays Seller for the company is consideration. Consideration can be anything that a Seller is willing to accept in exchange for the ownership of her company, such as land, another company, or, yes, cash (be that dollars, pounds, Romanian leu, or whatever).MoreLess
Exploring Financing Options To many, buying a company means an exchange of cash: Seller gets some dough, and Buyer gets the company. This transaction implicitly states that the payment is currency, to be paid now, and the price is fixed. Although that’s one way to finance a d...eal, it’s not the be-all and end-all of M&A transactions. Timing, currency, and even the amount of payment all affect a deal’s financing.
Although cash, especially the all-time favorite “cash at closing” variety, is the preferred payment, it’s not the only way to pay for a company. A better word for what Buyer pays Seller for the company is consideration. Consideration can be anything that a Seller is willing to accept in exchange for the ownership of her company, such as land, another company, or, yes, cash (be that dollars, pounds, Romanian leu, or whatever).MoreLess
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