Discussion: Financing acquisitions with earnouts

Isil Erel

Journal of Accounting and Economics, 2018, vol. 66, issue 2, 396-398

Abstract: “Financing Acquisitions with Earnouts” by Thomas Bates, Jordan Neyland, and Yolanda Wang broadly focuses on an important topic: how firms finance their acquisitions. Specifically, authors study the role of earnout agreements in financing acquisitions and show that they could be substantial both for financially constrained firms and at times when external capital is more expensive. My discussion focuses on the economic significance of the results presented, questioning the importance of earnouts in the world of M&As and discussing the role of financing synergies in general.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:66:y:2018:i:2:p:396-398

DOI: 10.1016/j.jacceco.2018.08.003

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