M&A Transaction Consideration: Evaluating Cash, Stock, Seller Notes and Earnouts

Weighing the Financing and Tax Benefits and Risks of Cash and Non-Cash Purchase Consideration

Recording of a 90-minute CLE webinar with Q&A

Conducted on Thursday, December 4, 2014

Recorded event now available

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Program Materials

This CLE webinar will examine key factors for deal counsel when evaluating whether to use cash, stock, seller notes, earnouts or other non-cash options as purchase consideration in M&A deals. The panel will also discuss how counsel can mitigate risks associated with different forms of consideration.

Description

M&A buyers may acquire a target company using cash, stock, seller notes, earnouts or other deferred or contingent payments as purchase consideration. Cash is the simplest and most common form of consideration; however, there are circumstances in which a non-cash purchase may be advantageous.

Determining the most appropriate form of purchase consideration will depend on available financing, tax benefits or risks, and expected performance of the buyer’s stock. When stock is used, the transaction may be tax-free for the target’s stockholders. Seller notes also have tax benefits for the target’s stockholders. Earnouts can be attractive because they may allow the target’s stockholders to receive an upward price adjustment post-closing.

Listen as our authoritative panel explains recent trends in the use of cash or non-cash consideration in M&A transactions, the pros and cons of each type of consideration, and strategies for mitigating risks with the type(s) of consideration selected.

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Outline

  1. Consideration alternatives—benefits and risks
    1. Cash
    2. Stock
    3. Seller notes
    4. Earnouts
    5. Other contingent or deferred consideration
  2. Latest trends in choice of consideration
  3. Mitigating risks of selected form of consideration

Benefits

The panel will review these and other key issues:

  • In what situations is non-cash consideration most appropriate for M&A deals?
  • What are the key tax issues to understand and consider when using stock or seller notes as purchase consideration?
  • What factors should buyers and sellers take into account when using earnouts or other deferred or contingent payments as purchase consideration?

Faculty

Christopher M. Flanagan
Christopher M. Flanagan
Partner
Edwards Wildman Palmer

Mr. Flanagan's general corporate and partnership tax practice focuses on tax planning and analysis in the...  |  Read More

Mitchell Martin
Mitchell Martin
Principal
McLean Group

Mr. Martin is co-head of the firm's M&A Practice as well as its Transportation and Logistics and its...  |  Read More

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