Company A wants to buy Company B for $600 million, the max they think it is worth. However, Company B wants $630 million. Company A could use stock v. cash for the additional $30 million. Under what circumstances might Company A agree to the additional $30 million?
If Company A’s stock is over valued, it may consider using stock swap for the transaction. Or can defer payment based on hitting pre-determined performance targets, also known as an earnout.
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