Methods of payment in asset sales : contracting with equity versus cash

Deskripsi

We analyze intercorporate asset sales where equity is the means of payment, and compare the results to cash asset sales. Equity deals are value-enhancing for both buyers, 10 %, and sellers, 3 %, while cash sales generate seller returns of 1.9 % and buyer returns that are not significant. Combined wealth gains are large for equity deals, but modest for cash deals. Equity-based asset sales are not a precursor to consolidations between buyers and sellers, and do not affect buyer openness to the takeover market..Printed Journal