SOURCES OF FINANCING MERGERS & ACQUISITIONS TRANSACTIONS
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The fifth wave of mergers and acquisitions has started in the beginning of the 90s of the last century . Those transactions happen in each trade and merge the small and large firms, which were competitors earlier. Different factors determine the success of such transactions. One of the very important factors is the form of its financing. In most cases the companies use their own capitals - usually the reserved benefits. However, the reserved risk is very often too small for financing the transaction of merger or acquisition. In such situations managers of the firms have to take very important decision, which concerns the structure of the company's capital. Transactions of mergers and acquisitions can be financed by the capital owned by the firm and by other capital (ordinary stock and preference stock), by debts and bonds or by the hybrid instruments (bonds changed on stocks, warrants and mezzanine capital). The choice of capital influences the outcome because each form of financing changes the financial risk, capital costs and accessibility to the companies.
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