Merger & Acquisition Deal Structures
The Ways To Pay For an M&A Deal
Overall, there are define three common ways to pay for a merger and acquisition ( M&A) deal. However, from a creativity standpoint, there are multiple variants of using these overall common ways:
1. Cash. If Buyer, Inc. uses cash in its bid, it will offer shareholders in Seller, Inc. a specific amount of cash for each share of Seller, Inc.
2. Fixed-Value Stock. Buyer, Inc. may offer "fixed-value stock"--with a guarantee fixing the value of the shares it will pay--for each Seller, Inc. share. Put simply, in a fixed-value stock deal, the value of Buyer, Inc. shares offered to Seller, Inc. shareholders is completely fixed, while the number of shares offered fluctuates depending on Buyer, Inc. share price at closing date. This means that Buyer, Inc. shareholders bear all the price risks and rewards during the pre-closing period. Seller, Inc. shareholders face no price risk or reward, as they receive a fixed value of Buyer, Inc. shares.
3. Fixed-Shares Stock. Buyer, Inc. may offer "fixed-shares stock"--with a guarantee fixing the number of the shares it will pay--for each Seller, Inc. share. Put simply, in a fixed-share stock deal, the number of Buyer, Inc. shares offered to Seller, Inc. shareholders is completely fixed, while the value of shares offered fluctuates depending on Buyer, Inc. share price at closing date. This means that Buyer, Inc. and Seller, Inc. shareholders share the risk and rewards of changes in Buyer, Inc. stock price during the pre-closing period. In a fixed-shares stock deal, Seller, Inc. shareholders can face significant risk that their newly issued shares in Buyer, Inc. will trade at a discount to the pre-deal price of Buyer, Inc shares.
Please note that a particular M&A deal may have more than one of the three components as part of its offer. For example, acquirers often make an offer using a combination of cash, and either fixed-value stock or fixed-shares stock. There are many creative ways to use the combinations to effectively structure payment for a deal.
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Merger Agreement & Joint Venture Agreement Templates |
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Asset Purchase & Sale Agreement- DEF01 |
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Stock Purchase & Sale Agreement: Common Stock, Shorter Version- DEF02 |
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Stock Purchase & Sale Agreement: Common Stock, Longer Version- DEF11 |
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Stock Purchase & Sale Agreement: Preferred Stock, Longer Version- DEF12 |
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Distribution Agreement - DEF03 |
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Exclusive License Agreement - DEF04 |
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Joint Venture Agreement - DEF05 |
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Marketing & Sales Only Joint Venture Agreement - DEF06 |
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License Technology In Exchange For Stock Agreement - DEF13 |
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Partnership Agreement - DEF07 |
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Promissory Note - DEF08 |
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Non-Disclosure Agreement : DEF09 |
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Shareholder Agreement - DEF10 |
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Term Sheet/Letter of Intent Template |
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Asset Purchase - M&A01 |
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Asset Purchase - M&A02 |
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Stock For Cash & Stock Purchase - M&A03 |
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Stock For Cash Purchase - M&A04 |
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Stock for Stock Purchase - M&A05 |
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Earnout Purchase - M&A06 |
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Joint Venture - M&A07 |
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Product Distribution - M&A08 |
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Product License - M&A09 |
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Technology Development - M&A10 |
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Series A Preferred - M&A11 |
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Series B Preferred - M&A12 |
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Download Additional Amazing Deal Agreement and Term Sheet Templates For
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| Board Resolution Templates | General Business Templates | Intellectual Property (IP) Templates | Merger, Acquisition, and Joint Venture Templates |
| Naming Board Members | Corporate Director Indemnity | IP Development & Transfer | Asset Purchase (2nd Version) |
| Corporate Formation Consent | Employment Agreement | Assignment of Inventions | Acquisition of Joint Venture Interest |
| Authorization of Joint Venture | Software License | Trademark Assignment | Assumption of Debt |
| Limited Partnership (2nd Version) | Bill of Sale | ||
| General Partnership | Checklist For Stock Sale | ||
| Checklist For Asset Purchase | |||
| Indemnity From Shareholder to Buyer |
| Other Templates | File Description |
| Exclusive License Agreement | Template to develop an exclusive license agreement between two parties (Word Document) |
| Agreement For Joint Technology Development, Licensing, & Marketing | Template to develop a comprehensive joint technology development, licensing, and marketing agreement between parties (Word Document) |
| Collaborative Research Agreement | Template agreement to develop the term and conditions for collaborative research between parties (Word Document) |
| How To Prepare A Business For Sale | Step-by-step action plan on the specific tactics of what you need to do prepare your business for a successful sale with the highest potential value (Word Document) |
| Transitioning Your Company Through A Sale Or Merger | Presentation template with the step-by-step issues to be faced and processes involved as a company and the owners go through a business sale or merger. The step-by-step process is complete in that it starts from the first call/meeting and goes beyond post merger/acquisition integration (PowerPoint Document) |