Chapter 12
Financing the Transaction
IN THIS CHAPTER
Examining various ways to finance and structure deals
Sorting out types of investors
Comparing majority and minority transactions
Recognizing the cost of capital
Before discussions between a buyer and seller heat up — and possibly burn out due to lack of planning — buyers need to line up their financing for acquisitions, and sellers should ascertain buyers’ ability to come up with the dough.
In this chapter, I explore the various methods that help buyers finance the acquisition of companies, including where buyers secure 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: The seller gets some dough, and the 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 deal, 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. ...
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