Financing an offer - part 1

In this lesson

1. 0:00 Financing an acquisition: cash or shares
2. 0:20 Facebook WhatsApp case study overview
3. 3:25 Key considerations in deal structure
4. 5:02 Funding cash payments four main sources
5. 7:47 Cash versus shares comparison
6. 9:15 Share offers as retention incentives

About this lesson

When buying another company, you need to decide whether to pay in cash, shares, or a combination of both—each approach has distinct advantages, costs, and implications for control, retention, and tax. You'll explore the four main sources of cash funding (retained earnings, debt, short-term loans, and equity issues), understand the trade-offs between cash and share offers, and see how real-world deals like Facebook's $19.6 billion acquisition of WhatsApp balance multiple considerations including management control, staff retention, and shareholder incentives. This content is essential for Strategic Business Leader (SBL) and Advanced Financial Management (AFM) candidates who need to evaluate financing options in corporate transactions. You'll work through practical calculations for share-for-share exchanges and learn how to factor in additional deal considerations like earn-out arrangements and restrictive covenants. By understanding both the mechanics and the strategic reasoning behind different financing structures, you'll be better equipped to analyse and recommend appropriate acquisition strategies in your exam case studies and real business scenarios.

Duration: 10m