Equity Acquisitions: CNBC Explains

Equity Acquisitions: CNBC Explains

When one business acquires another, there are several ways of financing the deal, including the use of the acquiring company's shares to cover the cost of the transaction. How do these transactions work from the acquiring company's perspective and what are the benefits for shareholders? Salman Khan of the Khan Academy discusses in a hypothetical example.

When one business acquires another, there are several ways of financing the deal, including the use of the acquiring company’s shares to cover the cost of the transaction. How do these transactions work from the acquiring company’s perspective and what are the benefits for shareholders? Salman Khan of the Khan Academy discusses in a hypothetical example.

From this video, you’ll understand:

• The rationale behind acquiring a company using stock
• How companies may issue shares to finance an acquisition