Cash offers
In this lesson, you'll learn what cash offers are in M&A transactions, why they're attractive to target shareholders, and the three main sources companies use to fund them.
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In this lesson
- 0:00 Cash offers in M&A transactions
- 0:08 Advantages of cash offers
- 0:48 Disadvantages and limitations
- 1:34 Three main funding sources
- 2:00 Using existing cash reserves
- 2:22 Raising funds through debt
- 2:59 Equity funding via rights issue
About this lesson
You'll explore the key advantages—speed, certainty, and straightforward valuation—alongside the critical disadvantages, including financial strain, increased gearing, and potential loss of future growth opportunities. The video walks you through the three funding sources: using existing cash reserves, raising debt through banks or bonds, and issuing new equity to shareholders, helping you understand when each approach makes sense and what trade-offs to consider. This is essential knowledge for Strategic Business Leader (SBL) and corporate finance modules, where acquisition strategy and financing decisions are core exam topics. Understanding cash offers versus other consideration types—and how to fund them responsibly—directly supports case study analysis and strategic recommendations in your qualification.
Duration: 3m
Transcript
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