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Commercial Awareness Discussion
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<blockquote data-quote="futuretraineesolicitor" data-source="post: 86096" data-attributes="member: 4098"><p>Hello [USER=4218]@Dwight[/USER]. I have a question regarding Equity financing in M&A transactions. From what I've understood, equity financing means two things. First is, selling shares of your company for money and then use that money to acquire another company, with the money that you just earned by selling your shares. Secondy, equity financing means that instead of selling your shares for money and using that money to acquire the other company, you directly give the shares worth the relevant amount to the shareholders of the target company.</p><p>This was the financing part.</p><p></p><p>Now, the payment part depends on what the shareholders of the target company would like. If they want cash, then they will get paid in cash but if they think that the shares of the acquirer will grow in value in future, they would prefer shares over cash. Have I interpreted "equity financing" in M&A correctly or is there something wrong here?</p></blockquote><p></p>
[QUOTE="futuretraineesolicitor, post: 86096, member: 4098"] Hello [USER=4218]@Dwight[/USER]. I have a question regarding Equity financing in M&A transactions. From what I've understood, equity financing means two things. First is, selling shares of your company for money and then use that money to acquire another company, with the money that you just earned by selling your shares. Secondy, equity financing means that instead of selling your shares for money and using that money to acquire the other company, you directly give the shares worth the relevant amount to the shareholders of the target company. This was the financing part. Now, the payment part depends on what the shareholders of the target company would like. If they want cash, then they will get paid in cash but if they think that the shares of the acquirer will grow in value in future, they would prefer shares over cash. Have I interpreted "equity financing" in M&A correctly or is there something wrong here? [/QUOTE]
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