There are three common methods of financing mergers and acquisitions. These are - (1) use own stock in exchange for the shares of the acquired firm (2) raise cash as debt or equity and use that to buy the shares of the acquired firm and (3) use a combination of own stock and cash to buy the shares of the acquired firm.
One financing strategy is to use own stock in acquiring the other firm. In this strategy, the firm acquiring firm issues its own shares to the shareholders of the ...
The solution explains the common methods of financing mergers and acquisitions.