M&A: Payment Options

M&A: Payment Options

Intuition Publishing Pty Ltd
Updated Sep 24, 2020

Acquiring companies in M&A deals may use a variety of payment methods to pay for their targets. Though cash is a common method, acquirers may also pay in shares (or other securities). The exchange ratio determines the number of shares that a target shareholder will receive in the merged entity when share payment is used. Here we explore the different payment types in M&A transactions and the pros and cons of each, and show you how to calculate the exchange ratio.