Cash vs. Stock Deals
Buyers can pay with cash, their own shares or a mix. The payment method changes what target shareholders actually receive, who carries the risk and how taxes work. Here is how to value each type.
Three ways to pay
| Payment | What target holders get | Who bears the risk |
|---|---|---|
| All cash | A fixed dollar amount | The buyer bears the risk of overpaying |
| All stock | Shares of the buyer | Both sides share the combined company’s fate |
| Cash and stock | Some of each | Split between both |
General features.
Unlock all of Investing School
The rest of this lesson, its chart examples and quiz are part of Investing School. Start free with Stock Market Fundamentals and the first lesson in every category.