How do the combined multiples change in a 100% cash of stock deal?

How do the combined multiples change in a 100% cash of stock deal?



Enterprise value should not be affected no matter the funding method. Equity value is however. So the less equity you use, the less the combined equity value is.

With the EBITDA, this should not be affected since it excludes interest payments from debt and from cash generation.

With Net Income, this is affected by interest on cash and debt.

So P/E is affected more than anything, but it depends on the circumstance

Generally, a 100% cash deal will create a P/E lower than 100% stock because the decrease in equity value is greater than the % decline in net income.


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