Acquisition Financing: Does How You Pay for It Have Implications for Success?

Gillis, William E.; Combs, James G.
November 2009
Academy of Management Perspectives;Nov2009, Vol. 23 Issue 4, p96
Academic Journal
This article presents information from a research paper by William E. Gillis of the Mitchell College of Business of the University of Alabama and James G. Combs of Florida State University about the implications of acquisition financing on the success of a business. Researchers looked at ways that give shareholders confidence in a merger. Research found that shareholders of the bidding company are concerned with the method of purchasing or the method of financing the purchase. They prefer to have the purchased company share in some of the risk of the merger. Shareholders are most happy when a merger purchase is made through bank financing because they know that the lender will carefully evaluate the purchase before approving financing.


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