Biotech Values

[DewDiligence]

[Quiz]—From the perspective of the acquiring company, why is a cash deal almost always economically cheaper than a stock deal at the same price?

In addition to the issue you’re thinking off regarding stocks options, there’s anther reason acquiring companies generally prefer cash deals: The buyout price in a cash deal can generally be slightly lower than in a stock deal because shareholders of the acquired company don’t have to be given extra compensation for incurring the risk of a decline in the acquiring company’s share price via a larger premium or a deal structured with collars.