M&A Bootcamp booklet - Flipbook - Page 12
Cash vs. Buyer’s Stock as Acquisition Currency
Cash
Buyer’s Stock
$X per share
Exchange ratio
(fixed, floating, collared)
Vote of buyer’s
stockholders required?
No
Yes, if sufficient number of
buyer shares issuable
Need to comply with
registration requirements of
federal securities laws?
No
Yes
One-way
(buyer performs due diligence
investigation with respect to target)
Two-way, if sufficient number
of buyer shares issuable
(each company performs due diligence
investigation with respect to the other)
Is a “tax-free
reorganization” possible?
No
Yes
Will target’s directors typically
be subject to Revlon duties?
Yes
No
Generally more accretive/less
dilutive than using buyer’s stock as
acquisition currency
Generally less accretive/more
dilutive than using cash as
acquisition currency
Typical pricing
formulation
Due diligence
Accretive/dilutive
to buyer’s EPS?