how acquisitions are financed
a company can buy another company with cash stock assumption of debt or a combination of some or all of the three at times the investment bank involved in the sale of one company might offer financing to the buying company this is known as staple financing and is done to produce larger and timely bids in smaller deals it is also common for one company to acquire all of another company s assets company x buys all of company y s assets for cash which means that company y will have only cash and debt if any of course company y becomes merely a shell and will eventually liquidate or enter other areas of business another acquisition deal known as a reverse merger enables a private company to become publicly listed in a relatively short time period reverse mergers occur when a private company that has strong prospects and is eager to acquire financing buys a publicly listed shell company with no legitimate business operations and limited assets the private company reverses merges into the public company and together they become an entirely new public corporation with tradable shares 