What is an 'All-Cash Deal'

An all-cash deal can have different meanings depending upon the context in which it is used. Essentially, it can refer to any exchange of cash for an asset in the absence of additional financing or exchange of other capital such as stock. There are two common scenarios where it is used, in a corporate acquisition or purchase of real estate.

1. The cash purchase of a target company by an acquiring company. When an all-cash deal occurs, the equity portion of the parent company's balance sheet remains unchanged. The parent company uses cash to purchase a majority percentage of the target's shares. This is opposed to an all-stock deal, where equity on the balance sheet would be affected.

2. The transfer of a real estate property without financing or mortgages. The buyer would produce the appropriate funds at the time of closing; the seller would receive the entire selling price at closing.

BREAKING DOWN 'All-Cash Deal'

1. All-cash mergers and acquisitions occur with no exchange of stock; the parent company purchases a majority of the common shares outstanding of the target company using only cash. This mostly occurs when the purchasing company is much larger than the company it is buying.

2. An all-cash real estate transaction occurs with no buyer financing. There may be significant drawbacks to paying cash for real estate, including tax consequences resulting from no mortgage interest tax deduction or the loss of earning power on the money that is tied up in the purchase. However, sellers of real estate can prefer all cash deals as there is no risk that the buyer's financing might fall through.

RELATED TERMS
  1. Real Estate

    Real estate is property made up of land as well as anything on ...
  2. Mergers and Acquisitions - M&A

    Mergers and acquisitions (M&A) is a general term that refers ...
  3. Cash Per Share

    Cash flow per share is the broadest measure of available cash ...
  4. Cash Flow From Financing Activities

    Cash flow from financing activities is a category in a company’s ...
  5. Outside Broker

    The term outside broker has several applications in finance. ...
  6. Private Equity Real Estate

    Private equity real estate is an asset class that consists of ...
Related Articles
  1. Investing

    Real Estate Vs. Stocks: Which One's Right For You?

    There are ups and downs for both real estate and stock investments, so before diving in, know the differences between the two.
  2. Investing

    A Guide to Real Estate Investing

    Investing in real estate is a popular choice for good reasons, but it's more complicated than owning your typical stocks and bonds.
  3. Investing

    The Ins And Outs of Seller-Financed Real Estate Deals

    There's more than one way to buy or sell a house. Seller financing presents yet another unique option.
  4. Investing

    Leverage: Increasing your real estate net worth

    Using leverage in housing purchase can significantly increase your real estate net worth if you use it carefully. Learn more on how increasing leverage can benefit your net worth.
  5. Investing

    Add Some Real Estate To Your Portfolio

    From investing in REITs to owning your own home, find out how to diversify your portfolio with real estate assets.
  6. Investing

    4 Key Factors That Drive the Real Estate Market

    Whether you are investing directly or indirectly in property, you need to know the factors that affect its value.
  7. Investing

    How to Make Money With Real Estate Options

    Buying real estate options is one way to invest in real estate at a lower entry cost.
  8. Investing

    The Risks Of Real Estate Sector Funds

    Discover the risks and rewards of investing in real estate funds, as well as some of the best and worst performers.
  9. Investing

    Is Now A Good Time To Invest In Real Estate?

    From carrying costs to investment risk, there's a lot to consider before you invest in real estate.
RELATED FAQS
  1. All-stock vs All-cash M&A deal

    Mergers and acquisitions are becoming increasingly popular forms of corporate restructuring. Learn how it can affect the ... Read Answer >>
  2. What financial metrics are best for evaluating companies in the real estate sector?

    Learn about some of the most important financial metrics and other analytic tools before investing in a real estate company ... Read Answer >>
Hot Definitions
  1. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  2. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  3. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  4. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  5. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  6. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
Trading Center